Correlation Between Amazon and Black Hills

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

Diversification Opportunities for Amazon and Black Hills

  Correlation Coefficient

Very weak diversification

The 3 months correlation between Amazon and Black is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills 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 Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Amazon i.e., Amazon and Black Hills go up and down completely randomly.

Pair Corralation between Amazon and Black Hills

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Black Hills. In addition to that, Amazon is 1.81 times more volatile than Black Hills. It trades about -0.11 of its total potential returns per unit of risk. Black Hills is currently generating about 0.04 per unit of volatility. If you would invest  6,892  in Black Hills on September 2, 2022 and sell it today you would earn a total of  158.00  from holding Black Hills or generate 2.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

Amazon Inc  vs.  Black Hills

 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 inconsistent 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

Black Hills 
Black Performance
0 of 100
Over the last 90 days Black Hills has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Black Hills is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Black Price Channel

Amazon and Black Hills Volatility Contrast

   Predicted Return Density   

Pair Trading with Amazon and Black Hills

The main advantage of trading using opposite Amazon and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.
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The idea behind Amazon Inc and Black Hills 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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