Correlation Between Amazon and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Amazon and SPDR SP 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 SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and SPDR SP Dividend, you can compare the effects of market volatilities on Amazon and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and SPDR SP.
Diversification Opportunities for Amazon and SPDR SP
Poor diversification
The 3 months correlation between Amazon and SPDR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and SPDR SP Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Dividend 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Dividend has no effect on the direction of Amazon i.e., Amazon and SPDR SP go up and down completely randomly.
Pair Corralation between Amazon and SPDR SP
Given the investment horizon of 90 days Amazon Inc is expected to under-perform the SPDR SP. In addition to that, Amazon is 1.7 times more volatile than SPDR SP Dividend. It trades about -0.03 of its total potential returns per unit of risk. SPDR SP Dividend is currently generating about 0.01 per unit of volatility. If you would invest 12,823 in SPDR SP Dividend on January 26, 2024 and sell it today you would earn a total of 22.00 from holding SPDR SP Dividend or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Amazon Inc vs. SPDR SP Dividend
Performance |
| Timeline |
| Amazon Inc |
| SPDR SP Dividend |
Amazon and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and SPDR SP
The main advantage of trading using opposite Amazon and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.The idea behind Amazon Inc and SPDR SP Dividend 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.| SPDR SP vs. SPDR Russell 1000 | SPDR SP vs. SPDR MSCI USA | SPDR SP vs. SPDR MSCI EAFE | SPDR SP vs. SPDR SSGA Large |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Stocks Directory Find actively traded stocks across global markets |