Correlation Between Amazon and Schlumberger

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

Diversification Opportunities for Amazon and Schlumberger

-0.78
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Amazon and Schlumberger is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Schlumberger NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger NV 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger NV has no effect on the direction of Amazon i.e., Amazon and Schlumberger go up and down completely randomly.

Pair Corralation between Amazon and Schlumberger

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Schlumberger. In addition to that, Amazon is 1.81 times more volatile than Schlumberger NV. It trades about -0.19 of its total potential returns per unit of risk. Schlumberger NV is currently generating about -0.02 per unit of volatility. If you would invest  5,168  in Schlumberger NV on August 28, 2022 and sell it today you would lose (85.00)  from holding Schlumberger NV or give up 1.64% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Amazon Inc  vs.  Schlumberger 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 conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Schlumberger NV 
Schlumberger Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Schlumberger NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Schlumberger sustained solid returns over the last few months and may actually be approaching a breakup point.

Schlumberger Price Channel

Amazon and Schlumberger Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Schlumberger

The main advantage of trading using opposite Amazon and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger's long position.
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The idea behind Amazon Inc and Schlumberger 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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