Correlation Between Various Eateries and Amazon
Can any of the company-specific risk be diversified away by investing in both Various Eateries 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 Various Eateries and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Various Eateries PLC and Amazon Inc, you can compare the effects of market volatilities on Various Eateries 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 Various Eateries with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Various Eateries and Amazon.
Diversification Opportunities for Various Eateries and Amazon
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Various and Amazon is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Various Eateries PLC and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Various Eateries 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 Various Eateries 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 Various Eateries i.e., Various Eateries and Amazon go up and down completely randomly.
Pair Corralation between Various Eateries and Amazon
Assuming the 90 days trading horizon Various Eateries PLC is expected to under-perform the Amazon. But the stock apears to be less risky and, when comparing its historical volatility, Various Eateries PLC is 1.06 times less risky than Amazon. The stock trades about -0.06 of its potential returns per unit of risk. The Amazon Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9,735 in Amazon Inc on October 12, 2024 and sell it today you would earn a total of 12,015 from holding Amazon Inc or generate 123.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Various Eateries PLC vs. Amazon Inc
Performance |
| Timeline |
| Various Eateries PLC |
| Amazon Inc |
Various Eateries and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Various Eateries and Amazon
The main advantage of trading using opposite Various Eateries and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Various Eateries 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.| Various Eateries vs. CVS Health Corp | Various Eateries vs. Primary Health Properties | Various Eateries vs. Eco Animal Health | Various Eateries vs. United Internet AG |
| Amazon vs. Ecofin Global Utilities | Amazon vs. Various Eateries PLC | Amazon vs. Alliance Data Systems | Amazon vs. United Utilities Group |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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