Correlation Between Amazon and Welcia Holdings
Can any of the company-specific risk be diversified away by investing in both Amazon and Welcia Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Amazon and Welcia Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Welcia Holdings Co, you can compare the effects of market volatilities on Amazon and Welcia Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Amazon with a short position of Welcia Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Welcia Holdings.
Diversification Opportunities for Amazon and Welcia Holdings
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amazon and Welcia is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Welcia Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welcia Holdings and Amazon is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Amazon Inc are associated (or correlated) with Welcia Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welcia Holdings has no effect on the direction of Amazon i.e., Amazon and Welcia Holdings go up and down completely randomly.
Pair Corralation between Amazon and Welcia Holdings
Given the investment horizon of 90 days Amazon is expected to generate 7.86 times less return on investment than Welcia Holdings. But when comparing it to its historical volatility, Amazon Inc is 13.32 times less risky than Welcia Holdings. It trades about 0.1 of its potential returns per unit of risk. Welcia Holdings Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,120 in Welcia Holdings Co on September 5, 2024 and sell it today you would earn a total of 30.00 from holding Welcia Holdings Co or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 30.51% |
| Values | Daily Returns |
Amazon Inc vs. Welcia Holdings Co
Performance |
| Timeline |
| Amazon Inc |
| Welcia Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amazon and Welcia Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Welcia Holdings
The main advantage of trading using opposite Amazon and Welcia Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Welcia Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Welcia Holdings will offset losses from the drop in Welcia Holdings' long position.The idea behind Amazon Inc and Welcia Holdings Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Welcia Holdings vs. Olympic Steel | Welcia Holdings vs. Topbuild Corp | Welcia Holdings vs. Summit Environmental | Welcia Holdings vs. Skyline |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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