Correlation Between Amazon and Sculptor Acquisition

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

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

Diversification Opportunities for Amazon and Sculptor Acquisition

0.84

Correlation Coefficient

Amazon  Sculptor Acquisition

Very poor diversification

The 3 months correlation between Amazon and Sculptor is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Sculptor Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sculptor Acquisition Corp 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 Sculptor Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sculptor Acquisition Corp has no effect on the direction of Amazon i.e., Amazon and Sculptor Acquisition go up and down completely randomly.

Pair Corralation between Amazon and Sculptor Acquisition

If you would invest  17,333  in Amazon Inc on September 4, 2024 and sell it today you would earn a total of  3,738  from holding Amazon Inc or generate 21.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.59%
Values	Daily Returns

Amazon Inc  vs.  Sculptor Acquisition Corp

Amazon Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 14 (%) 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.

Sculptor Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sculptor Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sculptor Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amazon and Sculptor Acquisition

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

The idea behind Amazon Inc and Sculptor Acquisition Corp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.