Correlation Between Vivint Smart and Amazon

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

Diversification Opportunities for Vivint Smart and Amazon

0.25
  Correlation Coefficient

Modest diversification

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

Pair Corralation between Vivint Smart and Amazon

If you would invest  1,200  in Vivint Smart Home on January 24, 2024 and sell it today you would earn a total of  0.00  from holding Vivint Smart Home or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy5.0%
ValuesDaily Returns

Vivint Smart Home  vs.  Amazon Inc

 Performance 
       Timeline  
Vivint Smart Home 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Vivint Smart Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vivint Smart is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.
Amazon Inc 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
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 displayed solid returns over the last few months and may actually be approaching a breakup point.

Vivint Smart and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vivint Smart and Amazon

The main advantage of trading using opposite Vivint Smart and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vivint Smart 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 Vivint Smart Home 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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