Correlation Between Amazon and Worley Parsons

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

Diversification Opportunities for Amazon and Worley Parsons

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Amazon and Worley is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Worley Parsons ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worley Parsons ADR 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 Worley Parsons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worley Parsons ADR has no effect on the direction of Amazon i.e., Amazon and Worley Parsons go up and down completely randomly.

Pair Corralation between Amazon and Worley Parsons

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Worley Parsons. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 1.43 times less risky than Worley Parsons. The stock trades about -0.03 of its potential returns per unit of risk. The Worley Parsons ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  875.00  in Worley Parsons ADR on August 29, 2022 and sell it today you would earn a total of  109.00  from holding Worley Parsons ADR or generate 12.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Worley Parsons ADR

 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

Worley Parsons ADR 
Worley Performance
0 of 100
Over the last 90 days Worley Parsons ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Worley Parsons is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Worley Price Channel

Amazon and Worley Parsons Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Worley Parsons

The main advantage of trading using opposite Amazon and Worley Parsons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Worley Parsons 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 Worley Parsons will offset losses from the drop in Worley Parsons' long position.
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The idea behind Amazon Inc and Worley Parsons ADR 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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