Correlation Between PureTech Health and Amazon
Can any of the company-specific risk be diversified away by investing in both PureTech Health 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 PureTech Health and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PureTech Health plc and Amazon Inc, you can compare the effects of market volatilities on PureTech Health 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 PureTech Health with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Amazon.
Diversification Opportunities for PureTech Health and Amazon
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PureTech and Amazon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and PureTech Health 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 PureTech Health plc 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 PureTech Health i.e., PureTech Health and Amazon go up and down completely randomly.
Pair Corralation between PureTech Health and Amazon
Assuming the 90 days trading horizon PureTech Health plc is expected to under-perform the Amazon. In addition to that, PureTech Health is 2.24 times more volatile than Amazon Inc. It trades about -0.34 of its total potential returns per unit of risk. Amazon Inc is currently generating about -0.15 per unit of volatility. If you would invest 23,000 in Amazon Inc on October 12, 2024 and sell it today you would lose (750.00) from holding Amazon Inc or give up 3.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
PureTech Health plc vs. Amazon Inc
Performance |
| Timeline |
| PureTech Health plc |
| Amazon Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
PureTech Health and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PureTech Health and Amazon
The main advantage of trading using opposite PureTech Health and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureTech Health 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.| PureTech Health vs. Trainline Plc | PureTech Health vs. Tavistock Investments Plc | PureTech Health vs. LPKF Laser Electronics | PureTech Health vs. Monks Investment Trust |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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