Correlation Between GEAR4MUSIC and Amazon
Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC and Amazon 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 GEAR4MUSIC and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEAR4MUSIC LS 10 and Amazon Inc, you can compare the effects of market volatilities on GEAR4MUSIC and Amazon 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 GEAR4MUSIC with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC and Amazon.
Diversification Opportunities for GEAR4MUSIC and Amazon
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GEAR4MUSIC and Amazon is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and GEAR4MUSIC 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 GEAR4MUSIC LS 10 are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of GEAR4MUSIC i.e., GEAR4MUSIC and Amazon go up and down completely randomly.
Pair Corralation between GEAR4MUSIC and Amazon
Assuming the 90 days horizon GEAR4MUSIC LS 10 is expected to under-perform the Amazon. In addition to that, GEAR4MUSIC is 1.12 times more volatile than Amazon Inc. It trades about -0.25 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.18 per unit of volatility. If you would invest 17,294 in Amazon Inc on August 24, 2024 and sell it today you would earn a total of 1,706 from holding Amazon Inc or generate 9.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEAR4MUSIC LS 10 vs. Amazon Inc
Performance |
| Timeline |
| GEAR4MUSIC LS 10 |
| Amazon Inc |
GEAR4MUSIC and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEAR4MUSIC and Amazon
The main advantage of trading using opposite GEAR4MUSIC and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| GEAR4MUSIC vs. Amazon Inc | GEAR4MUSIC vs. Amazon Inc | GEAR4MUSIC vs. Alibaba Group Holdings | GEAR4MUSIC vs. MEITUAN UNSPADR2B |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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