Correlation Between Amazon and EA Series

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

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

Diversification Opportunities for Amazon and EA Series

-0.06

Correlation Coefficient

Amazon  EA Series

Good diversification

The 3 months correlation between Amazon and CCMG is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust 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 EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Amazon i.e., Amazon and EA Series go up and down completely randomly.

Pair Corralation between Amazon and EA Series

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the EA Series. In addition to that, Amazon is 2.34 times more volatile than EA Series Trust. It trades about -0.09 of its total potential returns per unit of risk. EA Series Trust is currently generating about 0.06 per unit of volatility. If you would invest  2,751  in EA Series Trust on December 27, 2024 and sell it today you would earn a total of  67.00  from holding EA Series Trust or generate 2.44% return on investment over 90 days.

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

Amazon Inc  vs.  EA Series Trust

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 latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

EA Series Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, EA Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Amazon and EA Series

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

The idea behind Amazon Inc and EA Series Trust 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.