Correlation Between Gores Holdings and Amazon

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

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

Diversification Opportunities for Gores Holdings and Amazon

-0.63

Correlation Coefficient

Gores Holdings  Amazon

Excellent diversification

The 3 months correlation between Gores and Amazon is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Gores Holdings VIII and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Gores Holdings 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 Gores Holdings VIII 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 Gores Holdings i.e., Gores Holdings and Amazon go up and down completely randomly.

Pair Corralation between Gores Holdings and Amazon

If you would invest  17,815  in Amazon Inc on January 20, 2024 and sell it today you would earn a total of  107.00  from holding Amazon Inc or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Gores Holdings VIII  vs.  Amazon Inc

Gores Holdings VIII

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gores Holdings VIII has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gores Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Amazon Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 11 (%) 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.

Pair Trading with Gores Holdings and Amazon

The main advantage of trading using opposite Gores Holdings and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gores Holdings 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 Gores Holdings VIII 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.