Correlation Between Amazon and International Business
Can any of the company-specific risk be diversified away by investing in both Amazon and International Business 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 International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and International Business Machines, you can compare the effects of market volatilities on Amazon and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and International Business.
Diversification Opportunities for Amazon and International Business
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Amazon and International is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Amazon i.e., Amazon and International Business go up and down completely randomly.
Pair Corralation between Amazon and International Business
Assuming the 90 days trading horizon Amazon Inc is expected to generate 1.39 times more return on investment than International Business. However, Amazon is 1.39 times more volatile than International Business Machines. It trades about 0.11 of its potential returns per unit of risk. International Business Machines is currently generating about -0.01 per unit of risk. If you would invest 272,923 in Amazon Inc on January 26, 2024 and sell it today you would earn a total of 29,059 from holding Amazon Inc or generate 10.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.77% |
| Values | Daily Returns |
Amazon Inc vs. International Business Machine
Performance |
| Timeline |
| Amazon Inc |
| International Business |
Amazon and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and International Business
The main advantage of trading using opposite Amazon and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| Amazon vs. Micron Technology | Amazon vs. DXC Technology | Amazon vs. Southwest Airlines | Amazon vs. Steel Dynamics |
| International Business vs. FiscalNote Holdings | International Business vs. Innodata | International Business vs. Aurora Innovation | International Business vs. Conduent |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |