Correlation Between Scientific Games and Amazon
Can any of the company-specific risk be diversified away by investing in both Scientific Games 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 Scientific Games and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scientific Games and Amazon Inc, you can compare the effects of market volatilities on Scientific Games 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 Scientific Games with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scientific Games and Amazon.
Diversification Opportunities for Scientific Games and Amazon
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scientific and Amazon is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Scientific Games 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 Scientific Games 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 Scientific Games i.e., Scientific Games and Amazon go up and down completely randomly.
Pair Corralation between Scientific Games and Amazon
Assuming the 90 days horizon Scientific Games is expected to generate 1.41 times less return on investment than Amazon. In addition to that, Scientific Games is 1.19 times more volatile than Amazon Inc. It trades about 0.11 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 17,864 in Amazon Inc on August 31, 2024 and sell it today you would earn a total of 1,838 from holding Amazon Inc or generate 10.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Scientific Games vs. Amazon Inc
Performance |
| Timeline |
| Scientific Games |
| Amazon Inc |
Scientific Games and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scientific Games and Amazon
The main advantage of trading using opposite Scientific Games and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games 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.| Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc |
| Amazon vs. Scientific Games | Amazon vs. FUTURE GAMING GRP | Amazon vs. Grupo Carso SAB | Amazon vs. GEELY AUTOMOBILE |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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