Should we be picking up Best Buy or Amazon?

Today we may see the proof that Best Buy would recover much slower from the current slide as its shares went up 2.02% to Amazon's 5.0964%. As many investors are getting excited about consumer cyclical space, Amazon and Best Buy may be going in opposite directions. We are going to inspect some of the competitive aspects of both Amazon and Best Buy.
Published over a year ago
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Reviewed by Raphi Shpitalnik

By analyzing existing basic indicators between Amazon and Best Buy, you can compare the effects of market volatilities on both companies' prices and check if they can diversify away market risk if combined in one of your portfolios. You can also utilize pair trading strategies for matching a long position in Best Buy with a short position in Amazon. Check out our pair correlation module for more information.

Let's begin by analyzing the assets.
The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Amazon has an asset utilization ratio of 775.62 percent. This suggests that the company is making $7.76 for each dollar of assets. An increasing asset utilization means that Amazon Inc is more efficient with each dollar of assets it utilizes for everyday operations.
Out of tens of thousands of stocks, funds, and ETFs that trade on global exchanges each represent an individual company which you can analyze using comparative analysis. To determine which one of the two entities, such as Amazon or 1StdibsCom is a better fit for your portfolio, analyzing a few basic fundamental indicators is a good first step.

How important is Amazon's Liquidity

Amazon financial leverage refers to using borrowed capital as a funding source to finance Amazon Inc ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Amazon financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Amazon's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Amazon's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Amazon's total debt and its cash.

Correlation Between Amazon and 1StdibsCom

In general, Stock analysis is a method for investors and traders to make individual buying and selling decisions. Stock correlation analysis is also essential because it can help investors realize that they may not be as diversified as they think. Risk management strategies are usually required to make sure all portfolios are properly aligned against their risk tolerance level. You can consider holding Amazon together with similar or unrelated positions with a negative correlation. For example, you can also add 1StdibsCom to your portfolio. If 1StdibsCom is not perfectly correlated to Amazon it will diversify some of the market risks out of the positively correlated stocks in your portfolio. However, the disadvantage of this sort of hedging is that it can potentially affect your investment returns throughout market cycles. When Amazon, for example, performs excellent and delivers stable returns, the negatively correlated position you locked in as a hedge may drag your returns down.
Are you currently holding both Amazon and 1StdibsCom in your portfolio? Please note if you are using this as a pair-trade strategy between Amazon and 1StdibsCom, watch out for correlation discrepancy over time. Relying on the historical price correlations and assuming that it will not change may lead to short-term losses. Please check pair correlation details between AMZN and DIBS for more information.

Breaking down Amazon Indicators

Revenue is income that a firm generates from business activities such us rendering services or selling goods to customers. It is a crucial part of a business and an essential item when evaluating a company's financial statements. Revenues from a firm's primary business operations can be reported on the income statement as sales revenue, net sales, or simply sales, depending on the industry in which a given company operates.
Revenue is typically recorded when cash or cash equivalents are exchanged for services or goods and can include product or services discounts, promotions, as well as early payments on invoices or services rendered in advance.

Revenue Breakdown

Let me now analyze Amazon revenue. Based on the latest financial disclosure, Amazon Inc reported 502.19 B of revenue. This is much higher than that of the Consumer Cyclical sector and significantly higher than that of the Internet Retail industry. The revenue for all United States stocks is significantly lower than that of the stock. As for Best Buy we see revenue of 50.77 B, which is much higher than that of the Internet Retail
AMZN
502.2 B
AMZN502.19 Billion90.82
Sector0.00.0
BBY50.77 Billion9.18

Our perspective of the latest Amazon rise

The maximum drawdown is down to 13.25 as of today.
As of the 10th of November, Amazon shows the mean deviation of 2.08, and Risk Adjusted Performance of (0.34). Amazon Inc technical analysis gives you the methodology to make use of historical prices and volume patterns to determine a pattern that approximates the direction of the firm's future prices. Put another way, you can use this information to find out if the firm will indeed mirror its model of historical prices and volume momentum, or the prices will eventually revert. We were able to analyze nineteen technical drivers for Amazon Inc, which can be compared to its rivals. Please confirm Amazon Inc coefficient of variation, as well as the relationship between the treynor ratio and semi variance to decide if Amazon Inc is priced correctly, providing market reflects its regular price of 90.53 per share. Given that Amazon has jensen alpha of (0.67), we suggest you to validate Amazon Inc's prevailing market performance to make sure the company can sustain itself at a future point.

The Current Takeaway on Amazon Investment

Whereas some other entities under the internet retail industry are still a bit expensive, Amazon may offer a potential longer-term growth to institutional investors. While some institutional investors may not share our view we believe that the current risk-reward utility is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Amazon.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Rifka Kats do not own shares of Amazon Inc. Please refer to our Terms of Use for any information regarding our disclosure principles.

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