Correlation Between United Parcel and Amazon

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

Diversification Opportunities for United Parcel and Amazon

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between United and Amazon is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and United Parcel 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 United Parcel Service 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 United Parcel i.e., United Parcel and Amazon go up and down completely randomly.

Pair Corralation between United Parcel and Amazon

Considering the 90-day investment horizon United Parcel Service is expected to generate 0.67 times more return on investment than Amazon. However, United Parcel Service is 1.5 times less risky than Amazon. It trades about 0.1 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.02 per unit of risk. If you would invest  16,730  in United Parcel Service on September 9, 2022 and sell it today you would earn a total of  737.00  from holding United Parcel Service or generate 4.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

United Parcel Service  vs.  Amazon Inc

 Performance (%) 
       Timeline  
United Parcel Service 
United Performance
0 of 100
Over the last 90 days United Parcel Service has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

United 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

United Parcel and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Parcel and Amazon

The main advantage of trading using opposite United Parcel and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel 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 United Parcel Service 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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