Correlation Between Amazon and AXA SA

Can any of the company-specific risk be diversified away by investing in both Amazon and AXA 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 AXA 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 AXA SA, you can compare the effects of market volatilities on Amazon and AXA 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 AXA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and AXA SA.

Diversification Opportunities for Amazon and AXA SA

-0.49

Correlation Coefficient

Amazon  AXA SA

Very good diversification

The 3 months correlation between Amazon and AXA is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA 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 AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of Amazon i.e., Amazon and AXA SA go up and down completely randomly.

Pair Corralation between Amazon and AXA SA

Assuming the 90 days horizon Amazon Inc is expected to generate 1.52 times more return on investment than AXA SA. However, Amazon is 1.52 times more volatile than AXA SA. It trades about 0.1 of its potential returns per unit of risk. AXA SA is currently generating about 0.06 per unit of risk. If you would invest  9,565  in Amazon Inc on October 23, 2024 and sell it today you would earn a total of  12,435  from holding Amazon Inc or generate 130.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Amazon Inc  vs.  AXA SA

Amazon Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 20 (%) 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.

AXA SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AXA SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AXA SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Amazon and AXA SA

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

The idea behind Amazon Inc and AXA 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.