Correlation Between Amazon and Carillon Scout

Can any of the company-specific risk be diversified away by investing in both Amazon and Carillon Scout 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 Carillon Scout into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amazon Inc and Carillon Scout Mid, you can compare the effects of market volatilities on Amazon and Carillon Scout 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 Carillon Scout. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Carillon Scout.

Diversification Opportunities for Amazon and Carillon Scout

0.84

Correlation Coefficient

Amazon  Carillon Scout

Very poor diversification

The 3 months correlation between Amazon and Carillon is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Carillon Scout Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carillon Scout Mid 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 Carillon Scout. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carillon Scout Mid has no effect on the direction of Amazon i.e., Amazon and Carillon Scout go up and down completely randomly.

Pair Corralation between Amazon and Carillon Scout

Given the investment horizon of 90 days Amazon is expected to generate 1.14 times less return on investment than Carillon Scout. In addition to that, Amazon is 2.01 times more volatile than Carillon Scout Mid. It trades about 0.23 of its total potential returns per unit of risk. Carillon Scout Mid is currently generating about 0.51 per unit of volatility. If you would invest  2,603  in Carillon Scout Mid on September 4, 2024 and sell it today you would earn a total of  264.00  from holding Carillon Scout Mid or generate 10.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Amazon Inc  vs.  Carillon Scout Mid

Amazon Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.

Carillon Scout Mid

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carillon Scout Mid are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Carillon Scout showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amazon and Carillon Scout

The main advantage of trading using opposite Amazon and Carillon Scout positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Carillon Scout 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 Carillon Scout will offset losses from the drop in Carillon Scout's long position.

The idea behind Amazon Inc and Carillon Scout Mid 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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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.