Correlation Between SLR Investment and Amazon
Can any of the company-specific risk be diversified away by investing in both SLR Investment 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 SLR Investment and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLR Investment Corp and Amazon Inc, you can compare the effects of market volatilities on SLR Investment 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 SLR Investment with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and Amazon.
Diversification Opportunities for SLR Investment and Amazon
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SLR and Amazon is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and SLR Investment 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 SLR Investment Corp 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 SLR Investment i.e., SLR Investment and Amazon go up and down completely randomly.
Pair Corralation between SLR Investment and Amazon
Assuming the 90 days horizon SLR Investment is expected to generate 1.75 times less return on investment than Amazon. But when comparing it to its historical volatility, SLR Investment Corp is 1.61 times less risky than Amazon. It trades about 0.09 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 13,044 in Amazon Inc on September 1, 2024 and sell it today you would earn a total of 6,496 from holding Amazon Inc or generate 49.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLR Investment Corp vs. Amazon Inc
Performance |
| Timeline |
| SLR Investment Corp |
| Amazon Inc |
SLR Investment and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLR Investment and Amazon
The main advantage of trading using opposite SLR Investment and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment 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.| SLR Investment vs. Ameriprise Financial | SLR Investment vs. Ares Management Corp | SLR Investment vs. Superior Plus Corp | SLR Investment vs. NMI Holdings |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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