Correlation Between Amazon and Core Laboratories

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

Diversification Opportunities for Amazon and Core Laboratories

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Amazon and Core Laboratories is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Core Laboratories NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Laboratories 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 Core Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Laboratories has no effect on the direction of Amazon i.e., Amazon and Core Laboratories go up and down completely randomly.

Pair Corralation between Amazon and Core Laboratories

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Core Laboratories. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 1.48 times less risky than Core Laboratories. The stock trades about -0.04 of its potential returns per unit of risk. The Core Laboratories NV is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,838  in Core Laboratories NV on September 7, 2022 and sell it today you would lose (864.00)  from holding Core Laboratories NV or give up 30.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Core Laboratories NV

 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 unfluctuating 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

Core Laboratories 
Core Laboratories Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Core Laboratories NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent essential indicators, Core Laboratories sustained solid returns over the last few months and may actually be approaching a breakup point.

Core Laboratories Price Channel

Amazon and Core Laboratories Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Core Laboratories

The main advantage of trading using opposite Amazon and Core Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Core Laboratories 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 Core Laboratories will offset losses from the drop in Core Laboratories' long position.
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The idea behind Amazon Inc and Core Laboratories NV 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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