Correlation Between Amazon and Maj Invest
Can any of the company-specific risk be diversified away by investing in both Amazon and Maj Invest 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 Maj Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Maj Invest , you can compare the effects of market volatilities on Amazon and Maj Invest 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 Maj Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Maj Invest.
Diversification Opportunities for Amazon and Maj Invest
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Amazon and Maj is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Maj Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maj Invest 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 Maj Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maj Invest has no effect on the direction of Amazon i.e., Amazon and Maj Invest go up and down completely randomly.
Pair Corralation between Amazon and Maj Invest
Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Maj Invest. In addition to that, Amazon is 3.21 times more volatile than Maj Invest . It trades about -0.04 of its total potential returns per unit of risk. Maj Invest is currently generating about -0.08 per unit of volatility. If you would invest 20,341 in Maj Invest on January 25, 2024 and sell it today you would lose (127.00) from holding Maj Invest or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 86.36% |
| Values | Daily Returns |
Amazon Inc vs. Maj Invest
Performance |
| Timeline |
| Amazon Inc |
| Maj Invest |
Amazon and Maj Invest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Maj Invest
The main advantage of trading using opposite Amazon and Maj Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Maj Invest 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 Maj Invest will offset losses from the drop in Maj Invest's long position.The idea behind Amazon Inc and Maj Invest 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.| Maj Invest vs. Novo Nordisk AS | Maj Invest vs. Nordea Bank Abp | Maj Invest vs. DSV Panalpina AS | Maj Invest vs. AP Mller |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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