Correlation Between Amazon and Associated Capital

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

Diversification Opportunities for Amazon and Associated Capital

0.26
  Correlation Coefficient

Modest diversification

The 13 months correlation between Amazon and Associated is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Associated Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Capital 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 Associated Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Capital has no effect on the direction of Amazon i.e., Amazon and Associated Capital go up and down completely randomly.

Pair Corralation between Amazon and Associated Capital

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Associated Capital. In addition to that, Amazon is 1.58 times more volatile than Associated Capital Group. It trades about -0.05 of its total potential returns per unit of risk. Associated Capital Group is currently generating about -0.01 per unit of volatility. If you would invest  4,181  in Associated Capital Group on August 31, 2022 and sell it today you would lose (321.00)  from holding Associated Capital Group or give up 7.68% of portfolio value over 90 days.
Time Period13 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Associated Capital Group

 Performance (%) 
       Timeline  
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 latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Amazon Price Channel

Associated Capital 
Associated Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Associated Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Associated Price Channel

Amazon and Associated Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Associated Capital

The main advantage of trading using opposite Amazon and Associated Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Associated Capital 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 Associated Capital will offset losses from the drop in Associated Capital's long position.
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The idea behind Amazon Inc and Associated Capital Group 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 Price Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

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