Correlation Between Amazon and Wayne Savings

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

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

Diversification Opportunities for Amazon and Wayne Savings

0.12

Correlation Coefficient

Amazon  Wayne Savings

Average diversification

The 3 months correlation between Amazon and Wayne is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Wayne Savings Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayne Savings Bancshares 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 Wayne Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayne Savings Bancshares has no effect on the direction of Amazon i.e., Amazon and Wayne Savings go up and down completely randomly.

Pair Corralation between Amazon and Wayne Savings

Given the investment horizon of 90 days Amazon is expected to generate 1.13 times less return on investment than Wayne Savings. In addition to that, Amazon is 1.29 times more volatile than Wayne Savings Bancshares. It trades about 0.1 of its total potential returns per unit of risk. Wayne Savings Bancshares is currently generating about 0.14 per unit of volatility. If you would invest  2,625  in Wayne Savings Bancshares on September 4, 2024 and sell it today you would earn a total of  216.00  from holding Wayne Savings Bancshares or generate 8.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	7.88%
Values	Daily Returns

Amazon Inc  vs.  Wayne Savings Bancshares

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.

Wayne Savings Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wayne Savings Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Wayne Savings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Amazon and Wayne Savings

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

The idea behind Amazon Inc and Wayne Savings Bancshares 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.