Correlation Between Amazon and Bankinvest Europa

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

Diversification Opportunities for Amazon and Bankinvest Europa

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Amazon and Bankinvest is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Bankinvest - Europa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinvest - Europa 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 Bankinvest Europa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinvest - Europa has no effect on the direction of Amazon i.e., Amazon and Bankinvest Europa go up and down completely randomly.

Pair Corralation between Amazon and Bankinvest Europa

Given the investment horizon of 90 days Amazon Inc is expected to generate 1.91 times more return on investment than Bankinvest Europa. However, Amazon is 1.91 times more volatile than Bankinvest Europa. It trades about 0.14 of its potential returns per unit of risk. Bankinvest Europa is currently generating about 0.2 per unit of risk. If you would invest  17,354  in Amazon Inc on December 29, 2023 and sell it today you would earn a total of  684.00  from holding Amazon Inc or generate 3.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Bankinvest - Europa

 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.
Bankinvest - Europa 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Bankinvest Europa has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Bankinvest Europa is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Amazon and Bankinvest Europa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Bankinvest Europa

The main advantage of trading using opposite Amazon and Bankinvest Europa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Bankinvest Europa 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 Bankinvest Europa will offset losses from the drop in Bankinvest Europa's long position.
The idea behind Amazon Inc and Bankinvest Europa 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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