Correlation Between Amazon and Myomo

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

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

Diversification Opportunities for Amazon and Myomo

0.74

Correlation Coefficient

Amazon  Myomo

Poor diversification

The 3 months correlation between Amazon and Myomo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Myomo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myomo Inc 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 Myomo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myomo Inc has no effect on the direction of Amazon i.e., Amazon and Myomo go up and down completely randomly.

Pair Corralation between Amazon and Myomo

Given the investment horizon of 90 days Amazon is expected to generate 5.03 times less return on investment than Myomo. But when comparing it to its historical volatility, Amazon Inc is 2.85 times less risky than Myomo. It trades about 0.19 of its potential returns per unit of risk. Myomo Inc is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  383.00  in Myomo Inc on September 4, 2024 and sell it today you would earn a total of  165.00  from holding Myomo Inc or generate 43.08% return on investment over 90 days.

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

Amazon Inc  vs.  Myomo Inc

Amazon Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 13 (%) 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.

Myomo Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Myomo Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Myomo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amazon and Myomo

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

The idea behind Amazon Inc and Myomo Inc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.