Correlation Between Tabula Rasa and Amazon

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Can any of the company-specific risk be diversified away by investing in both Tabula Rasa 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 Tabula Rasa and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tabula Rasa HealthCare and Amazon Inc, you can compare the effects of market volatilities on Tabula Rasa 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 Tabula Rasa with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tabula Rasa and Amazon.

Diversification Opportunities for Tabula Rasa and Amazon

  Correlation Coefficient

Poor diversification

The 3 months correlation between Tabula and Amazon is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tabula Rasa HealthCare and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Tabula Rasa 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 Tabula Rasa HealthCare 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 Tabula Rasa i.e., Tabula Rasa and Amazon go up and down completely randomly.

Pair Corralation between Tabula Rasa and Amazon

Given the investment horizon of 90 days Tabula Rasa HealthCare is expected to under-perform the Amazon. In addition to that, Tabula Rasa is 1.89 times more volatile than Amazon Inc. It trades about -0.25 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.13 per unit of volatility. If you would invest  9,350  in Amazon Inc on December 26, 2022 and sell it today you would earn a total of  463.00  from holding Amazon Inc or generate 4.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

Tabula Rasa HealthCare  vs.  Amazon Inc

 Performance (%) 
Tabula Rasa HealthCare 

Tabula Performance

3 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Tabula Rasa HealthCare are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Tabula Rasa exhibited solid returns over the last few months and may actually be approaching a breakup point.
Amazon Inc 

Amazon Performance

9 of 100

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 uncertain basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.

Tabula Rasa and Amazon Volatility Contrast

   Predicted Return Density   

Pair Trading with Tabula Rasa and Amazon

The main advantage of trading using opposite Tabula Rasa and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tabula Rasa 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.
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The idea behind Tabula Rasa HealthCare 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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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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