Correlation Between Amazon and Hartford Financial
Can any of the company-specific risk be diversified away by investing in both Amazon and Hartford Financial 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 Hartford Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and The Hartford Financial, you can compare the effects of market volatilities on Amazon and Hartford Financial 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 Hartford Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Hartford Financial.
Diversification Opportunities for Amazon and Hartford Financial
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amazon and Hartford is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and The Hartford Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Financial 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 Hartford Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Financial has no effect on the direction of Amazon i.e., Amazon and Hartford Financial go up and down completely randomly.
Pair Corralation between Amazon and Hartford Financial
Assuming the 90 days trading horizon Amazon Inc is expected to generate 1.86 times more return on investment than Hartford Financial. However, Amazon is 1.86 times more volatile than The Hartford Financial. It trades about 0.11 of its potential returns per unit of risk. The Hartford Financial is currently generating about 0.07 per unit of risk. If you would invest 2,540 in Amazon Inc on October 11, 2024 and sell it today you would earn a total of 4,141 from holding Amazon Inc or generate 163.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.99% |
| Values | Daily Returns |
Amazon Inc vs. The Hartford Financial
Performance |
| Timeline |
| Amazon Inc |
| The Hartford Financial |
Amazon and Hartford Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Hartford Financial
The main advantage of trading using opposite Amazon and Hartford Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Hartford Financial 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 Hartford Financial will offset losses from the drop in Hartford Financial's long position.| Amazon vs. American Airlines Group | Amazon vs. Beyond Meat | Amazon vs. Marfrig Global Foods | Amazon vs. Hospital Mater Dei |
| Hartford Financial vs. Taiwan Semiconductor Manufacturing | Hartford Financial vs. Apple Inc | Hartford Financial vs. Alibaba Group Holding | Hartford Financial vs. Banco Santander Chile |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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