Correlation Between Amazon and Ancora Microcap

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

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

Diversification Opportunities for Amazon and Ancora Microcap

0.82

Correlation Coefficient

Amazon  Ancora Microcap

Very poor diversification

The 3 months correlation between Amazon and Ancora is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Ancora Microcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ancora Microcap 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 Ancora Microcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ancora Microcap has no effect on the direction of Amazon i.e., Amazon and Ancora Microcap go up and down completely randomly.

Pair Corralation between Amazon and Ancora Microcap

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Ancora Microcap. In addition to that, Amazon is 1.93 times more volatile than Ancora Microcap Fund. It trades about -0.12 of its total potential returns per unit of risk. Ancora Microcap Fund is currently generating about -0.08 per unit of volatility. If you would invest  1,605  in Ancora Microcap Fund on December 29, 2024 and sell it today you would lose (74.00) from holding Ancora Microcap Fund or give up 4.61% of portfolio value over 90 days.

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

Amazon Inc  vs.  Ancora Microcap Fund

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.

Ancora Microcap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ancora Microcap Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Ancora Microcap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amazon and Ancora Microcap

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

The idea behind Amazon Inc and Ancora Microcap Fund 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.