Correlation Between Plus500 and Amazon

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Can any of the company-specific risk be diversified away by investing in both Plus500 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 Plus500 and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plus500 and Amazon Inc, you can compare the effects of market volatilities on Plus500 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 Plus500 with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plus500 and Amazon.

Diversification Opportunities for Plus500 and Amazon

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Plus500 and Amazon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Plus500 and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Plus500 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 Plus500 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 Plus500 i.e., Plus500 and Amazon go up and down completely randomly.

Pair Corralation between Plus500 and Amazon

Assuming the 90 days horizon Plus500 is expected to generate 0.76 times more return on investment than Amazon. However, Plus500 is 1.31 times less risky than Amazon. It trades about 0.05 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.06 per unit of risk. If you would invest  1,800  in Plus500 on September 7, 2022 and sell it today you would earn a total of  500.00  from holding Plus500 or generate 27.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Plus500  vs.  Amazon Inc

 Performance (%) 
       Timeline  
Plus500 
Plus500 Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Plus500 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Plus500 exhibited solid returns over the last few months and may actually be approaching a breakup point.

Plus500 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 January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Plus500 and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Plus500 and Amazon

The main advantage of trading using opposite Plus500 and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plus500 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 Plus500 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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