Correlation Between EQT and Amazon

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

Diversification Opportunities for EQT and Amazon

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between EQT and Amazon is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding EQT Corp. and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and EQT 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 EQT Corporation 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 EQT i.e., EQT and Amazon go up and down completely randomly.

Pair Corralation between EQT and Amazon

Considering the 90-day investment horizon EQT Corporation is expected to under-perform the Amazon. But the stock apears to be less risky and, when comparing its historical volatility, EQT Corporation is 1.04 times less risky than Amazon. The stock trades about -0.23 of its potential returns per unit of risk. The Amazon Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  9,053  in Amazon Inc on September 8, 2022 and sell it today you would lose (228.00)  from holding Amazon Inc or give up 2.52% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

EQT Corp.  vs.  Amazon Inc

 Performance (%) 
       Timeline  
EQT Corporation 
EQT Performance
0 of 100
Over the last 90 days EQT Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2023. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

EQT 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 unfluctuating 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

EQT and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EQT and Amazon

The main advantage of trading using opposite EQT and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT 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 EQT Corporation 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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