Correlation Between Pyxis Tankers and Amazon

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

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

Diversification Opportunities for Pyxis Tankers and Amazon

0.25

Correlation Coefficient

Pyxis Tankers  Amazon

Modest diversification

The 3 months correlation between Pyxis and Amazon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Pyxis Tankers and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Pyxis Tankers 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 Pyxis Tankers 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 Pyxis Tankers i.e., Pyxis Tankers and Amazon go up and down completely randomly.

Pair Corralation between Pyxis Tankers and Amazon

Considering the 90-day investment horizon Pyxis Tankers is expected to under-perform the Amazon. In addition to that, Pyxis Tankers is 1.12 times more volatile than Amazon Inc. It trades about -0.11 of its total potential returns per unit of risk. Amazon Inc is currently generating about -0.05 per unit of volatility. If you would invest  17,971  in Amazon Inc on January 23, 2024 and sell it today you would lose (248.00) from holding Amazon Inc or give up 1.38% of portfolio value over 90 days.

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

Pyxis Tankers  vs.  Amazon Inc

Pyxis Tankers

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pyxis Tankers are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pyxis Tankers is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Amazon Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Amazon may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Pyxis Tankers and Amazon

The main advantage of trading using opposite Pyxis Tankers and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pyxis Tankers 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 Pyxis Tankers 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.