Correlation Between Amazon and Bollore SA
Can any of the company-specific risk be diversified away by investing in both Amazon and Bollore SA 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 Amazon and Bollore SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Bollore SA, you can compare the effects of market volatilities on Amazon and Bollore SA 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 Amazon with a short position of Bollore SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Bollore SA.
Diversification Opportunities for Amazon and Bollore SA
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and Bollore is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Bollore SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bollore SA and Amazon 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 Amazon Inc are associated (or correlated) with Bollore SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bollore SA has no effect on the direction of Amazon i.e., Amazon and Bollore SA go up and down completely randomly.
Pair Corralation between Amazon and Bollore SA
Given the investment horizon of 90 days Amazon Inc is expected to generate 2.04 times more return on investment than Bollore SA. However, Amazon is 2.04 times more volatile than Bollore SA. It trades about 0.25 of its potential returns per unit of risk. Bollore SA is currently generating about -0.03 per unit of risk. If you would invest 18,080 in Amazon Inc on September 5, 2024 and sell it today you would earn a total of 3,736 from holding Amazon Inc or generate 20.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 97.67% |
Values | Daily Returns |
Amazon Inc vs. Bollore SA
Performance |
Timeline |
Amazon Inc |
Bollore SA |
Amazon and Bollore SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amazon and Bollore SA
The main advantage of trading using opposite Amazon and Bollore SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Bollore SA 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 Bollore SA will offset losses from the drop in Bollore SA's long position.The idea behind Amazon Inc and Bollore SA 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.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 the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |