Correlation Between Amazon and SL Green

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

Diversification Opportunities for Amazon and SL Green

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Amazon and SL Green is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty 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 SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of Amazon i.e., Amazon and SL Green go up and down completely randomly.

Pair Corralation between Amazon and SL Green

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the SL Green. In addition to that, Amazon is 1.13 times more volatile than SL Green Realty. It trades about -0.13 of its total potential returns per unit of risk. SL Green Realty is currently generating about -0.03 per unit of volatility. If you would invest  4,393  in SL Green Realty on September 5, 2022 and sell it today you would lose (332.00)  from holding SL Green Realty or give up 7.56% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  SL Green Realty

 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

SL Green Realty 
SL Green Performance
0 of 100
Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, SL Green is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

SL Green Price Channel

Amazon and SL Green Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and SL Green

The main advantage of trading using opposite Amazon and SL Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, SL Green 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 SL Green will offset losses from the drop in SL Green's long position.
Amazon vs. Carvana Co
The idea behind Amazon Inc and SL Green Realty 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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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