Correlation Between Amazon and Energy Today

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Can any of the company-specific risk be diversified away by investing in both Amazon and Energy Today 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 Amazon and Energy Today into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Energy Today, you can compare the effects of market volatilities on Amazon and Energy Today 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 Amazon with a short position of Energy Today. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Energy Today.

Diversification Opportunities for Amazon and Energy Today

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Amazon and Energy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Energy Today in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Today and Amazon 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 Amazon Inc are associated (or correlated) with Energy Today. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Today has no effect on the direction of Amazon i.e., Amazon and Energy Today go up and down completely randomly.

Pair Corralation between Amazon and Energy Today

If you would invest  12,946  in Amazon Inc on December 29, 2023 and sell it today you would earn a total of  5,037  from holding Amazon Inc or generate 38.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Energy Today

 Performance 
       Timeline  
Amazon Inc 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.
Energy Today 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Energy Today has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Energy Today is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Amazon and Energy Today Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Energy Today

The main advantage of trading using opposite Amazon and Energy Today positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Energy Today 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 Energy Today will offset losses from the drop in Energy Today's long position.
The idea behind Amazon Inc and Energy Today pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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