Correlation Between BROADWIND ENRGY and Amazon

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

By analyzing existing cross correlation between BROADWIND ENRGY and Amazon Inc, you can compare the effects of market volatilities on BROADWIND ENRGY 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 BROADWIND ENRGY with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of BROADWIND ENRGY and Amazon.

Diversification Opportunities for BROADWIND ENRGY and Amazon

-0.02

Correlation Coefficient

BROADWIND ENRGY  Amazon

Good diversification

The 3 months correlation between BROADWIND and Amazon is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding BROADWIND ENRGY and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and BROADWIND ENRGY 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 BROADWIND ENRGY 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 BROADWIND ENRGY i.e., BROADWIND ENRGY and Amazon go up and down completely randomly.

Pair Corralation between BROADWIND ENRGY and Amazon

Assuming the 90 days trading horizon BROADWIND ENRGY is expected to under-perform the Amazon. In addition to that, BROADWIND ENRGY is 2.49 times more volatile than Amazon Inc. It trades about -0.02 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.1 per unit of volatility. If you would invest  8,999  in Amazon Inc on October 11, 2024 and sell it today you would earn a total of  12,446  from holding Amazon Inc or generate 138.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BROADWIND ENRGY  vs.  Amazon Inc

BROADWIND ENRGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BROADWIND ENRGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BROADWIND ENRGY is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Amazon Inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Amazon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BROADWIND ENRGY and Amazon

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

The idea behind BROADWIND ENRGY 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.