Correlation Between GP Investments and Amazon
Can any of the company-specific risk be diversified away by investing in both GP Investments 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 GP Investments and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GP Investments and Amazon Inc, you can compare the effects of market volatilities on GP Investments 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 GP Investments with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and Amazon.
Diversification Opportunities for GP Investments and Amazon
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between GPIV33 and Amazon is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and GP Investments 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 GP Investments 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 GP Investments i.e., GP Investments and Amazon go up and down completely randomly.
Pair Corralation between GP Investments and Amazon
Assuming the 90 days trading horizon GP Investments is expected to generate 2.8 times more return on investment than Amazon. However, GP Investments is 2.8 times more volatile than Amazon Inc. It trades about 0.02 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.18 per unit of risk. If you would invest 400.00 in GP Investments on November 18, 2024 and sell it today you would earn a total of 0.00 from holding GP Investments or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GP Investments vs. Amazon Inc
Performance |
| Timeline |
| GP Investments |
| Amazon Inc |
GP Investments and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Investments and Amazon
The main advantage of trading using opposite GP Investments and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments 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.| GP Investments vs. Verizon Communications | GP Investments vs. CM Hospitalar SA | GP Investments vs. Paycom Software | GP Investments vs. CVS Health |
| Amazon vs. Paycom Software | Amazon vs. Spotify Technology SA | Amazon vs. PENN Entertainment, | Amazon vs. Take Two Interactive Software |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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