Correlation Between Amazon and Astronics

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

Diversification Opportunities for Amazon and Astronics

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Amazon and Astronics is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Astronics Cp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics Cp 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 Astronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics Cp has no effect on the direction of Amazon i.e., Amazon and Astronics go up and down completely randomly.

Pair Corralation between Amazon and Astronics

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Astronics. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 1.09 times less risky than Astronics. The stock trades about -0.06 of its potential returns per unit of risk. The Astronics Cp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,030  in Astronics Cp on August 29, 2022 and sell it today you would lose (200.00)  from holding Astronics Cp or give up 19.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Astronics Cp

 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 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

Astronics Cp 
Astronics Performance
0 of 100
Over the last 90 days Astronics Cp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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.

Astronics Price Channel

Amazon and Astronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Astronics

The main advantage of trading using opposite Amazon and Astronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Astronics 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 Astronics will offset losses from the drop in Astronics' long position.
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The idea behind Amazon Inc and Astronics Cp 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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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