Correlation Between Cerner Corp and Amazon

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

Diversification Opportunities for Cerner Corp and Amazon

-0.81
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Cerner and Amazon is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cerner Corp and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Cerner Corp 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 Cerner Corp 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 Cerner Corp i.e., Cerner Corp and Amazon go up and down completely randomly.

Pair Corralation between Cerner Corp and Amazon

Given the investment horizon of 90 days Cerner Corp is expected to generate 0.47 times more return on investment than Amazon. However, Cerner Corp is 2.11 times less risky than Amazon. It trades about 0.06 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.03 per unit of risk. If you would invest  7,322  in Cerner Corp on September 2, 2022 and sell it today you would earn a total of  2,170  from holding Cerner Corp or generate 29.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy75.65%
ValuesDaily Returns

Cerner Corp  vs.  Amazon Inc

 Performance (%) 
       Timeline  
Cerner Corp 
Cerner Performance
0 of 100
Over the last 90 days Cerner Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Cerner Corp is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.
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 inconsistent 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

Cerner Corp and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cerner Corp and Amazon

The main advantage of trading using opposite Cerner Corp and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cerner Corp 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 Cerner Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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