Correlation Between Badger Infrastructure and Amazon

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

Diversification Opportunities for Badger Infrastructure and Amazon

0.61
  Correlation Coefficient

Poor diversification

The 8 months correlation between Badger and Amazon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Badger Infrastructure Solution and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Badger Infrastructure 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 Badger Infrastructure Solutions are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Badger Infrastructure i.e., Badger Infrastructure and Amazon go up and down completely randomly.

Pair Corralation between Badger Infrastructure and Amazon

Assuming the 90 days horizon Badger Infrastructure Solutions is expected to generate 0.74 times more return on investment than Amazon. However, Badger Infrastructure Solutions is 1.35 times less risky than Amazon. It trades about -0.06 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.05 per unit of risk. If you would invest  2,133  in Badger Infrastructure Solutions on September 1, 2022 and sell it today you would lose (89.00)  from holding Badger Infrastructure Solutions or give up 4.17% of portfolio value over 90 days.
Time Period8 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Badger Infrastructure Solution  vs.  Amazon Inc

 Performance (%) 
       Timeline  
Badger Infrastructure 
Badger Performance
0 of 100
Over the last 90 days Badger Infrastructure Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Badger Infrastructure is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Badger Price Channel

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

Badger Infrastructure and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Badger Infrastructure and Amazon

The main advantage of trading using opposite Badger Infrastructure and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Badger Infrastructure position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.
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The idea behind Badger Infrastructure Solutions and Amazon Inc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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