Correlation Between Amazon and Graphic Packaging

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

Diversification Opportunities for Amazon and Graphic Packaging

  Correlation Coefficient

Very good diversification

The 3 months correlation between Amazon and Graphic is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Graphic Packaging Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphic Packaging Holding and Amazon 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 Amazon Inc are associated (or correlated) with Graphic Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphic Packaging Holding has no effect on the direction of Amazon i.e., Amazon and Graphic Packaging go up and down completely randomly.

Pair Corralation between Amazon and Graphic Packaging

Given the investment horizon of 90 days Amazon Inc is expected to generate 2.38 times more return on investment than Graphic Packaging. However, Amazon is 2.38 times more volatile than Graphic Packaging Holding. It trades about 0.06 of its potential returns per unit of risk. Graphic Packaging Holding is currently generating about -0.06 per unit of risk. If you would invest  8,614  in Amazon Inc on September 10, 2022 and sell it today you would earn a total of  295.00  from holding Amazon Inc or generate 3.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Amazon Inc  vs.  Graphic Packaging Holding

 Performance (%) 
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 January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Graphic Packaging Holding 
Graphic Performance
0 of 100
Over the last 90 days Graphic Packaging Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Graphic Packaging is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Graphic Price Channel

Amazon and Graphic Packaging Volatility Contrast

   Predicted Return Density   

Pair Trading with Amazon and Graphic Packaging

The main advantage of trading using opposite Amazon and Graphic Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Graphic Packaging 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 Graphic Packaging will offset losses from the drop in Graphic Packaging's long position.
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The idea behind Amazon Inc and Graphic Packaging Holding 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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