Correlation Between Amazon and CTEEP Companhia
Can any of the company-specific risk be diversified away by investing in both Amazon and CTEEP Companhia 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 CTEEP Companhia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and CTEEP Companhia, you can compare the effects of market volatilities on Amazon and CTEEP Companhia 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 CTEEP Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and CTEEP Companhia.
Diversification Opportunities for Amazon and CTEEP Companhia
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and CTEEP is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and CTEEP Companhia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTEEP Companhia 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 CTEEP Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTEEP Companhia has no effect on the direction of Amazon i.e., Amazon and CTEEP Companhia go up and down completely randomly.
Pair Corralation between Amazon and CTEEP Companhia
Assuming the 90 days trading horizon Amazon Inc is expected to generate 1.26 times more return on investment than CTEEP Companhia. However, Amazon is 1.26 times more volatile than CTEEP Companhia. It trades about 0.09 of its potential returns per unit of risk. CTEEP Companhia is currently generating about -0.02 per unit of risk. If you would invest 4,375 in Amazon Inc on August 27, 2024 and sell it today you would earn a total of 1,358 from holding Amazon Inc or generate 31.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.95% |
| Values | Daily Returns |
Amazon Inc vs. CTEEP Companhia
Performance |
| Timeline |
| Amazon Inc |
| CTEEP Companhia |
Amazon and CTEEP Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and CTEEP Companhia
The main advantage of trading using opposite Amazon and CTEEP Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, CTEEP Companhia 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 CTEEP Companhia will offset losses from the drop in CTEEP Companhia's long position.| Amazon vs. Ross Stores | Amazon vs. METISA Metalrgica Timboense | Amazon vs. Cognizant Technology Solutions | Amazon vs. Micron Technology |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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