Correlation Between Amazon and SIDETRADE

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

By analyzing existing cross correlation between Amazon Inc and SIDETRADE EO 1, you can compare the effects of market volatilities on Amazon and SIDETRADE 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 SIDETRADE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and SIDETRADE.

Diversification Opportunities for Amazon and SIDETRADE

-0.22

Correlation Coefficient

Amazon  SIDETRADE

Very good diversification

The 3 months correlation between Amazon and SIDETRADE is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and SIDETRADE EO 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIDETRADE EO 1 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 SIDETRADE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIDETRADE EO 1 has no effect on the direction of Amazon i.e., Amazon and SIDETRADE go up and down completely randomly.

Pair Corralation between Amazon and SIDETRADE

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the SIDETRADE. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 1.47 times less risky than SIDETRADE. The stock trades about -0.12 of its potential returns per unit of risk. The SIDETRADE EO 1 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  22,000  in SIDETRADE EO 1 on December 30, 2024 and sell it today you would earn a total of  2,400  from holding SIDETRADE EO 1 or generate 10.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Amazon Inc  vs.  SIDETRADE EO 1

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

SIDETRADE EO 1

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SIDETRADE EO 1 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SIDETRADE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Amazon and SIDETRADE

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

The idea behind Amazon Inc and SIDETRADE EO 1 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.