Correlation Between Amazon and Guerrilla

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

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

Diversification Opportunities for Amazon and Guerrilla

-0.67

Correlation Coefficient

Amazon  Guerrilla

Excellent diversification

The 3 months correlation between Amazon and Guerrilla is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Guerrilla RF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guerrilla RF 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 Guerrilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guerrilla RF has no effect on the direction of Amazon i.e., Amazon and Guerrilla go up and down completely randomly.

Pair Corralation between Amazon and Guerrilla

Given the investment horizon of 90 days Amazon Inc is expected to generate 0.23 times more return on investment than Guerrilla. However, Amazon Inc is 4.36 times less risky than Guerrilla. It trades about 0.09 of its potential returns per unit of risk. Guerrilla RF is currently generating about -0.01 per unit of risk. If you would invest  9,812  in Amazon Inc on October 4, 2024 and sell it today you would earn a total of  12,127  from holding Amazon Inc or generate 123.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Amazon Inc  vs.  Guerrilla RF

Amazon Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.

Guerrilla RF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guerrilla RF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Amazon and Guerrilla

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

The idea behind Amazon Inc and Guerrilla RF 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..