Correlation Between Encore Wire and Amazon

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Encore Wire 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 Encore Wire and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Encore Wire Cp and Amazon Inc, you can compare the effects of market volatilities on Encore Wire 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 Encore Wire with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Wire and Amazon.

Diversification Opportunities for Encore Wire and Amazon

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Encore and Amazon is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Encore Wire Cp and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Encore Wire 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 Encore Wire Cp 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 Encore Wire i.e., Encore Wire and Amazon go up and down completely randomly.

Pair Corralation between Encore Wire and Amazon

Given the investment horizon of 90 days Encore Wire Cp is expected to generate 1.14 times more return on investment than Amazon. However, Encore Wire is 1.14 times more volatile than Amazon Inc. It trades about 0.08 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.03 per unit of risk. If you would invest  5,560  in Encore Wire Cp on August 30, 2022 and sell it today you would earn a total of  8,950  from holding Encore Wire Cp or generate 160.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Encore Wire Cp  vs.  Amazon Inc

 Performance (%) 
       Timeline  
Encore Wire Cp 
Encore Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Encore Wire Cp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Encore Wire may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Encore Price Channel

Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Encore Wire and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Encore Wire and Amazon

The main advantage of trading using opposite Encore Wire and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Wire 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.
Encore Wire vs. Legrand Sa ADR
Encore Wire vs. Legrand SA
Encore Wire vs. Mitsubishi Elect Cor
Encore Wire vs. Delta Electronics Thailand
The idea behind Encore Wire Cp 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.
Amazon vs. Groupon Cl A
Amazon vs. Aarons Holdings
Amazon vs. American Eagle Outfitters
Amazon vs. Abercrombie Fitch
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 Anywhere module to track or share privately all of your investments from the convenience of any device.

Other Complementary Tools

Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go