Correlation Between Carnival and Amazon
Can any of the company-specific risk be diversified away by investing in both Carnival 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 Carnival and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival and Amazon Inc, you can compare the effects of market volatilities on Carnival 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 Carnival with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival and Amazon.
Diversification Opportunities for Carnival and Amazon
Very good diversification
The 3 months correlation between Carnival and Amazon is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Carnival and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Carnival 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 Carnival 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 Carnival i.e., Carnival and Amazon go up and down completely randomly.
Pair Corralation between Carnival and Amazon
Considering the 90-day investment horizon Carnival is expected to under-perform the Amazon. In addition to that, Carnival is 1.84 times more volatile than Amazon Inc. It trades about -0.28 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.0 per unit of volatility. If you would invest 17,971 in Amazon Inc on January 25, 2024 and sell it today you would lose (17.00) from holding Amazon Inc or give up 0.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Carnival vs. Amazon Inc
Performance |
Timeline |
Carnival |
Amazon Inc |
Carnival and Amazon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Carnival and Amazon
The main advantage of trading using opposite Carnival and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival 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.Carnival vs. Yatra Online | Carnival vs. Despegar Corp | Carnival vs. Mondee Holdings | Carnival vs. MakeMyTrip Limited |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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