Correlation Between Amazon and NTG Nordic

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

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

Diversification Opportunities for Amazon and NTG Nordic

-0.61

Correlation Coefficient

Amazon  NTG Nordic

Excellent diversification

The 3 months correlation between Amazon and NTG is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport 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 NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Amazon i.e., Amazon and NTG Nordic go up and down completely randomly.

Pair Corralation between Amazon and NTG Nordic

Given the investment horizon of 90 days Amazon Inc is expected to generate 1.11 times more return on investment than NTG Nordic. However, Amazon is 1.11 times more volatile than NTG Nordic Transport. It trades about -0.05 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.07 per unit of risk. If you would invest  22,022  in Amazon Inc on December 2, 2024 and sell it today you would lose (794.00) from holding Amazon Inc or give up 3.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.02%
Values	Daily Returns

Amazon Inc  vs.  NTG Nordic Transport

Amazon Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Amazon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

NTG Nordic Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Amazon and NTG Nordic

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

The idea behind Amazon Inc and NTG Nordic Transport 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.