Correlation Between Amazon and ZKB Silver
Can any of the company-specific risk be diversified away by investing in both Amazon and ZKB Silver 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 ZKB Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and ZKB Silver ETF, you can compare the effects of market volatilities on Amazon and ZKB Silver 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 ZKB Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and ZKB Silver.
Diversification Opportunities for Amazon and ZKB Silver
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Amazon and ZKB is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and ZKB Silver ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Silver ETF 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 ZKB Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Silver ETF has no effect on the direction of Amazon i.e., Amazon and ZKB Silver go up and down completely randomly.
Pair Corralation between Amazon and ZKB Silver
Given the investment horizon of 90 days Amazon Inc is expected to generate 1.35 times more return on investment than ZKB Silver. However, Amazon is 1.35 times more volatile than ZKB Silver ETF. It trades about 0.23 of its potential returns per unit of risk. ZKB Silver ETF is currently generating about 0.15 per unit of risk. If you would invest 20,684 in Amazon Inc on September 12, 2024 and sell it today you would earn a total of 1,820 from holding Amazon Inc or generate 8.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Amazon Inc vs. ZKB Silver ETF
Performance |
| Timeline |
| Amazon Inc |
| ZKB Silver ETF |
Amazon and ZKB Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and ZKB Silver
The main advantage of trading using opposite Amazon and ZKB Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, ZKB Silver 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 ZKB Silver will offset losses from the drop in ZKB Silver's long position.The idea behind Amazon Inc and ZKB Silver ETF 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.| ZKB Silver vs. ZKB Silver ETF | ZKB Silver vs. ZKB Gold ETF | ZKB Silver vs. ZKB Gold ETF | ZKB Silver vs. ZKB Platinum ETF |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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