Correlation Between Natural Hlth and Amazon

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

Diversification Opportunities for Natural Hlth and Amazon

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Natural and Amazon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Natural Hlth Trd and Amazon Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Natural Hlth 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 Natural Hlth Trd 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 Natural Hlth i.e., Natural Hlth and Amazon go up and down completely randomly.

Pair Corralation between Natural Hlth and Amazon

Given the investment horizon of 90 days Natural Hlth Trd is expected to generate 0.81 times more return on investment than Amazon. However, Natural Hlth Trd is 1.23 times less risky than Amazon. It trades about 0.02 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.05 per unit of risk. If you would invest  685.00  in Natural Hlth Trd on February 15, 2022 and sell it today you would earn a total of  20.00  from holding Natural Hlth Trd or generate 2.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.6%
ValuesDaily Returns

Natural Hlth Trd  vs.  Amazon Inc

 Performance (%) 
      Timeline 
Natural Hlth Trd 
Natural Performance
0 of 100
Over the last 90 days Natural Hlth Trd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Natural 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 weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Natural Hlth and Amazon Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Natural Hlth and Amazon

The main advantage of trading using opposite Natural Hlth and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Hlth 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.
The idea behind Natural Hlth Trd 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.

Amazon Inc

Pair trading matchups for Amazon

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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