Correlation Between Amazon and Arcimoto

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

Diversification Opportunities for Amazon and Arcimoto

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Amazon and Arcimoto is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Arcimoto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcimoto 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 Arcimoto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcimoto has no effect on the direction of Amazon i.e., Amazon and Arcimoto go up and down completely randomly.

Pair Corralation between Amazon and Arcimoto

Given the investment horizon of 90 days Amazon Inc is expected to generate 0.35 times more return on investment than Arcimoto. However, Amazon Inc is 2.86 times less risky than Arcimoto. It trades about 0.05 of its potential returns per unit of risk. Arcimoto is currently generating about -0.17 per unit of risk. If you would invest  9,212  in Amazon Inc on September 3, 2022 and sell it today you would earn a total of  235.50  from holding Amazon Inc or generate 2.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Arcimoto

 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

Arcimoto 
Arcimoto Performance
0 of 100
Over the last 90 days Arcimoto has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2023. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Arcimoto Price Channel

Amazon and Arcimoto Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Arcimoto

The main advantage of trading using opposite Amazon and Arcimoto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Arcimoto 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 Arcimoto will offset losses from the drop in Arcimoto's long position.
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The idea behind Amazon Inc and Arcimoto 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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