Correlation Between Amazon and Bank First

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

Diversification Opportunities for Amazon and Bank First

-0.83
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Amazon and Bank First is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Bank First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank First National 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 Bank First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank First National has no effect on the direction of Amazon i.e., Amazon and Bank First go up and down completely randomly.

Pair Corralation between Amazon and Bank First

Given the investment horizon of 90 days Amazon is expected to generate 3.18 times less return on investment than Bank First. In addition to that, Amazon is 1.68 times more volatile than Bank First National. It trades about 0.04 of its total potential returns per unit of risk. Bank First National is currently generating about 0.24 per unit of volatility. If you would invest  8,710  in Bank First National on September 3, 2022 and sell it today you would earn a total of  885.00  from holding Bank First National or generate 10.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Amazon Inc  vs.  Bank First National

 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 weak 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

Bank First National 
Bank First Performance
15 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bank First National are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Bank First sustained solid returns over the last few months and may actually be approaching a breakup point.

Bank First Price Channel

Amazon and Bank First Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Bank First

The main advantage of trading using opposite Amazon and Bank First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Bank First 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 Bank First will offset losses from the drop in Bank First's long position.
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The idea behind Amazon Inc and Bank First National 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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