Correlation Between Sony Group and Amazon
Can any of the company-specific risk be diversified away by investing in both Sony Group 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 Sony Group and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group and Amazon Inc, you can compare the effects of market volatilities on Sony Group 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 Sony Group with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony Group and Amazon.
Diversification Opportunities for Sony Group and Amazon
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sony and Amazon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Sony Group 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 Sony Group 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 Sony Group i.e., Sony Group and Amazon go up and down completely randomly.
Pair Corralation between Sony Group and Amazon
Assuming the 90 days trading horizon Sony Group is expected to generate 3.39 times less return on investment than Amazon. In addition to that, Sony Group is 1.09 times more volatile than Amazon Inc. It trades about 0.02 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.08 per unit of volatility. If you would invest 12,020 in Amazon Inc on August 28, 2024 and sell it today you would earn a total of 6,900 from holding Amazon Inc or generate 57.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sony Group vs. Amazon Inc
Performance |
| Timeline |
| Sony Group |
| Amazon Inc |
Sony Group and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony Group and Amazon
The main advantage of trading using opposite Sony Group and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony Group 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.| Sony Group vs. LION ONE METALS | Sony Group vs. Grupo Carso SAB | Sony Group vs. Geely Automobile Holdings | Sony Group vs. ARDAGH METAL PACDL 0001 |
| Amazon vs. WESTLAKE CHEMICAL | Amazon vs. NISSAN CHEMICAL IND | Amazon vs. China BlueChemical | Amazon vs. Eastman Chemical |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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