Correlation Between Amazon and Metals Creek

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

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

Diversification Opportunities for Amazon and Metals Creek

0.35

Correlation Coefficient

Amazon  Metals Creek

Weak diversification

The 3 months correlation between Amazon and Metals is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Metals Creek Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Creek Resources 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 Metals Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Creek Resources has no effect on the direction of Amazon i.e., Amazon and Metals Creek go up and down completely randomly.

Pair Corralation between Amazon and Metals Creek

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Metals Creek. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 12.62 times less risky than Metals Creek. The stock trades about -0.12 of its potential returns per unit of risk. The Metals Creek Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.58  in Metals Creek Resources on December 29, 2024 and sell it today you would earn a total of  0.42  from holding Metals Creek Resources or generate 26.58% return on investment over 90 days.

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

Amazon Inc  vs.  Metals Creek Resources

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.

Metals Creek Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Creek Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Metals Creek reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amazon and Metals Creek

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

The idea behind Amazon Inc and Metals Creek Resources 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.