Correlation Between RWE Aktiengesellscha and Amazon
Can any of the company-specific risk be diversified away by investing in both RWE Aktiengesellscha 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 RWE Aktiengesellscha and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RWE Aktiengesellschaft and Amazon Inc, you can compare the effects of market volatilities on RWE Aktiengesellscha 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 RWE Aktiengesellscha with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of RWE Aktiengesellscha and Amazon.
Diversification Opportunities for RWE Aktiengesellscha and Amazon
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between RWE and Amazon is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding RWE Aktiengesellschaft and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and RWE Aktiengesellscha 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 RWE Aktiengesellschaft 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 RWE Aktiengesellscha i.e., RWE Aktiengesellscha and Amazon go up and down completely randomly.
Pair Corralation between RWE Aktiengesellscha and Amazon
Assuming the 90 days horizon RWE Aktiengesellschaft is expected to generate 0.79 times more return on investment than Amazon. However, RWE Aktiengesellschaft is 1.26 times less risky than Amazon. It trades about 0.04 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.03 per unit of risk. If you would invest 3,360 in RWE Aktiengesellschaft on January 26, 2024 and sell it today you would earn a total of 28.00 from holding RWE Aktiengesellschaft or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RWE Aktiengesellschaft vs. Amazon Inc
Performance |
| Timeline |
| RWE Aktiengesellschaft |
| Amazon Inc |
RWE Aktiengesellscha and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RWE Aktiengesellscha and Amazon
The main advantage of trading using opposite RWE Aktiengesellscha and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RWE Aktiengesellscha 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.| RWE Aktiengesellscha vs. ENEL Societa per | RWE Aktiengesellscha vs. PacifiCorp | RWE Aktiengesellscha vs. Sempra Energy |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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