Correlation Between Amazon and 1stdibs

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Amazon and 1stdibs 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 1stdibs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and 1stdibs, you can compare the effects of market volatilities on Amazon and 1stdibs 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 1stdibs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and 1stdibs.

Diversification Opportunities for Amazon and 1stdibs

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Amazon and 1stdibs is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and 1stdibs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1stdibs 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 1stdibs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1stdibs has no effect on the direction of Amazon i.e., Amazon and 1stdibs go up and down completely randomly.

Pair Corralation between Amazon and 1stdibs

Given the investment horizon of 90 days Amazon Inc is expected to generate 0.75 times more return on investment than 1stdibs. However, Amazon Inc is 1.34 times less risky than 1stdibs. It trades about 0.35 of its potential returns per unit of risk. 1stdibs is currently generating about 0.14 per unit of risk. If you would invest  11,376  in Amazon Inc on May 18, 2022 and sell it today you would earn a total of  2,942  from holding Amazon Inc or generate 25.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

Amazon Inc  vs.  1stdibs

 Performance (%) 
       Timeline  
Amazon Inc 
Amazon Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Amazon disclosed solid returns over the last few months and may actually be approaching a breakup point.

Amazon Price Channel

1stdibs 
1stdibs Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in 1stdibs are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, 1stdibs reported solid returns over the last few months and may actually be approaching a breakup point.

1stdibs Price Channel

Amazon and 1stdibs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and 1stdibs

The main advantage of trading using opposite Amazon and 1stdibs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, 1stdibs 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 1stdibs will offset losses from the drop in 1stdibs' long position.
The idea behind Amazon Inc and 1stdibs 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.
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

Other Complementary Tools

Commodity Channel Index
Use Commodity Channel Index to analyze current equity momentum
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
Shere Portfolio
Track or share privately all of your investments from the convenience of any device
Go
Price Transformation
Use Price Transformation models to analyze depth of different equity instruments across global markets
Go
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Go
Piotroski F Score
Get Piotroski F Score based on binary analysis strategy of nine different fundamentals
Go
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Go