Correlation Between Amazon and Birks

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

Diversification Opportunities for Amazon and Birks

  Correlation Coefficient

Modest diversification

The 3 months correlation between Amazon and Birks is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Birks Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birks Group 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 Birks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birks Group has no effect on the direction of Amazon i.e., Amazon and Birks go up and down completely randomly.

Pair Corralation between Amazon and Birks

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Birks. In addition to that, Amazon is 3.16 times more volatile than Birks Group. It trades about -0.1 of its total potential returns per unit of risk. Birks Group is currently generating about -0.03 per unit of volatility. If you would invest  519.00  in Birks Group on August 31, 2022 and sell it today you would lose (4.00)  from holding Birks Group or give up 0.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
ValuesDaily Returns

Amazon Inc  vs.  Birks Group

 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 December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Birks Group 
Birks Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Birks Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Birks is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Birks Price Channel

Amazon and Birks Volatility Contrast

   Predicted Return Density   

Pair Trading with Amazon and Birks

The main advantage of trading using opposite Amazon and Birks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Birks 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 Birks will offset losses from the drop in Birks' long position.
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The idea behind Amazon Inc and Birks 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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