Correlation Between Uber Technologies and Amazon
Can any of the company-specific risk be diversified away by investing in both Uber Technologies 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 Uber Technologies and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and Amazon Inc, you can compare the effects of market volatilities on Uber Technologies 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 Uber Technologies with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Amazon.
Diversification Opportunities for Uber Technologies and Amazon
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Uber and Amazon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Amazon go up and down completely randomly.
Pair Corralation between Uber Technologies and Amazon
Assuming the 90 days trading horizon Uber Technologies is expected to generate 1.46 times more return on investment than Amazon. However, Uber Technologies is 1.46 times more volatile than Amazon Inc. It trades about 0.09 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.1 per unit of risk. If you would invest 4,006 in Uber Technologies on August 25, 2024 and sell it today you would earn a total of 2,751 from holding Uber Technologies or generate 68.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uber Technologies vs. Amazon Inc
Performance |
| Timeline |
| Uber Technologies |
| Amazon Inc |
Uber Technologies and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uber Technologies and Amazon
The main advantage of trading using opposite Uber Technologies and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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.| Uber Technologies vs. SBI Insurance Group | Uber Technologies vs. British American Tobacco | Uber Technologies vs. REVO INSURANCE SPA | Uber Technologies vs. LIFENET INSURANCE CO |
| Amazon vs. PKSHA TECHNOLOGY INC | Amazon vs. CANON MARKETING JP | Amazon vs. Vastned Retail NV | Amazon vs. Uber Technologies |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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