Correlation Between Amazon and FIBRA Prologis

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

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

Diversification Opportunities for Amazon and FIBRA Prologis

-0.87

Correlation Coefficient

Amazon  FIBRA Prologis

Pay attention - limited upside

The 3 months correlation between Amazon and FIBRA is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and FIBRA Prologis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIBRA Prologis 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 FIBRA Prologis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIBRA Prologis has no effect on the direction of Amazon i.e., Amazon and FIBRA Prologis go up and down completely randomly.

Pair Corralation between Amazon and FIBRA Prologis

Assuming the 90 days trading horizon Amazon Inc is expected to generate 0.98 times more return on investment than FIBRA Prologis. However, Amazon Inc is 1.02 times less risky than FIBRA Prologis. It trades about 0.0 of its potential returns per unit of risk. FIBRA Prologis is currently generating about -0.13 per unit of risk. If you would invest  453,159  in Amazon Inc on October 11, 2024 and sell it today you would lose (861.00) from holding Amazon Inc or give up 0.19% of portfolio value over 90 days.

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

Amazon Inc  vs.  FIBRA Prologis

Amazon Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Amazon showed solid returns over the last few months and may actually be approaching a breakup point.

FIBRA Prologis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIBRA Prologis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Amazon and FIBRA Prologis

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

The idea behind Amazon Inc and FIBRA Prologis 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .