Correlation Between Amazon and Hyster-Yale Materials

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

Diversification Opportunities for Amazon and Hyster-Yale Materials

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Amazon and Hyster-Yale is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Hyster-Yale Materials Handling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyster-Yale Materials 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 Hyster-Yale Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyster-Yale Materials has no effect on the direction of Amazon i.e., Amazon and Hyster-Yale Materials go up and down completely randomly.

Pair Corralation between Amazon and Hyster-Yale Materials

Given the investment horizon of 90 days Amazon Inc is expected to generate 1.23 times more return on investment than Hyster-Yale Materials. However, Amazon is 1.23 times more volatile than Hyster-Yale Materials Handling. It trades about 0.07 of its potential returns per unit of risk. Hyster-Yale Materials Handling is currently generating about 0.06 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  338.00  from holding Amazon Inc or generate 3.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Hyster-Yale Materials Handling

 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

Hyster-Yale Materials 
Hyster-Yale Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Hyster-Yale Materials Handling are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Hyster-Yale Materials showed solid returns over the last few months and may actually be approaching a breakup point.

Hyster-Yale Price Channel

Amazon and Hyster-Yale Materials Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Hyster-Yale Materials

The main advantage of trading using opposite Amazon and Hyster-Yale Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Hyster-Yale Materials 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 Hyster-Yale Materials will offset losses from the drop in Hyster-Yale Materials' long position.
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The idea behind Amazon Inc and Hyster-Yale Materials Handling 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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