Correlation Between Amazon and PHENIXFIN

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

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

Diversification Opportunities for Amazon and PHENIXFIN

0.2

Correlation Coefficient

Amazon  PHENIXFIN

Modest diversification

The 3 months correlation between Amazon and PHENIXFIN is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and PHENIXFIN P DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHENIXFIN P DL 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 PHENIXFIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHENIXFIN P DL has no effect on the direction of Amazon i.e., Amazon and PHENIXFIN go up and down completely randomly.

Pair Corralation between Amazon and PHENIXFIN

Assuming the 90 days horizon Amazon Inc is expected to generate 1.09 times more return on investment than PHENIXFIN. However, Amazon is 1.09 times more volatile than PHENIXFIN P DL. It trades about 0.29 of its potential returns per unit of risk. PHENIXFIN P DL is currently generating about 0.15 per unit of risk. If you would invest  16,600  in Amazon Inc on October 8, 2024 and sell it today you would earn a total of  5,090  from holding Amazon Inc or generate 30.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Amazon Inc  vs.  PHENIXFIN P DL

Amazon Inc

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 23 (%) 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.

PHENIXFIN P DL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PHENIXFIN P DL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PHENIXFIN reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amazon and PHENIXFIN

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

The idea behind Amazon Inc and PHENIXFIN P DL 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.