Correlation Between AMCON Distributing and Amazon

Can any of the company-specific risk be diversified away by investing in both AMCON Distributing 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 AMCON Distributing and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMCON Distributing and Amazon Inc, you can compare the effects of market volatilities on AMCON Distributing 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 AMCON Distributing with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMCON Distributing and Amazon.

Diversification Opportunities for AMCON Distributing and Amazon

-0.66

Correlation Coefficient

AMCON Distributing  Amazon

Excellent diversification

The 3 months correlation between AMCON and Amazon is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and AMCON Distributing 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 AMCON Distributing 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 AMCON Distributing i.e., AMCON Distributing and Amazon go up and down completely randomly.

Pair Corralation between AMCON Distributing and Amazon

Considering the 90-day investment horizon AMCON Distributing is expected to under-perform the Amazon. In addition to that, AMCON Distributing is 1.86 times more volatile than Amazon Inc. It trades about -0.23 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.03 per unit of volatility. If you would invest  17,954  in Amazon Inc on February 23, 2024 and sell it today you would earn a total of  151.00  from holding Amazon Inc or generate 0.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

AMCON Distributing  vs.  Amazon Inc

AMCON Distributing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Amazon Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Amazon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with AMCON Distributing and Amazon

The main advantage of trading using opposite AMCON Distributing and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMCON Distributing 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.

The idea behind AMCON Distributing and Amazon Inc 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..