Correlation Between Amazon and Payden Global
Can any of the company-specific risk be diversified away by investing in both Amazon and Payden Global 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 Payden Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Payden Global Low, you can compare the effects of market volatilities on Amazon and Payden Global 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 Payden Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Payden Global.
Diversification Opportunities for Amazon and Payden Global
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and Payden is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Payden Global Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Global Low 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 Payden Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Global Low has no effect on the direction of Amazon i.e., Amazon and Payden Global go up and down completely randomly.
Pair Corralation between Amazon and Payden Global
Given the investment horizon of 90 days Amazon Inc is expected to generate 12.53 times more return on investment than Payden Global. However, Amazon is 12.53 times more volatile than Payden Global Low. It trades about 0.24 of its potential returns per unit of risk. Payden Global Low is currently generating about 0.07 per unit of risk. If you would invest 20,818 in Amazon Inc on September 9, 2024 and sell it today you would earn a total of 1,885 from holding Amazon Inc or generate 9.05% 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. Payden Global Low
Performance |
Timeline |
Amazon Inc |
Payden Global Low |
Amazon and Payden Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amazon and Payden Global
The main advantage of trading using opposite Amazon and Payden Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Payden Global 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 Payden Global will offset losses from the drop in Payden Global's long position.The idea behind Amazon Inc and Payden Global Low 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.Payden Global vs. Lord Abbett Health | Payden Global vs. Highland Longshort Healthcare | Payden Global vs. Live Oak Health | Payden Global vs. Invesco Global Health |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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