Correlation Between Amazon and Wag Group

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

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

Diversification Opportunities for Amazon and Wag Group

-0.09

Correlation Coefficient

Amazon  Wag Group

Good diversification

The 3 months correlation between Amazon and Wag is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Wag Group Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wag Group 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 Wag Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wag Group has no effect on the direction of Amazon i.e., Amazon and Wag Group go up and down completely randomly.

Pair Corralation between Amazon and Wag Group

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Wag Group. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 8.08 times less risky than Wag Group. The stock trades about -0.32 of its potential returns per unit of risk. The Wag Group Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2.14  in Wag Group Co on December 2, 2024 and sell it today you would earn a total of  1.34  from holding Wag Group Co or generate 62.62% 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.  Wag Group Co

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.

Wag Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wag Group Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Wag Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amazon and Wag Group

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

The idea behind Amazon Inc and Wag Group Co 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.