Correlation Between Amazon and SSgA SPDR

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

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

Diversification Opportunities for Amazon and SSgA SPDR

-0.63

Correlation Coefficient

Amazon  SSgA SPDR

Excellent diversification

The 3 months correlation between Amazon and SSgA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs 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 SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of Amazon i.e., Amazon and SSgA SPDR go up and down completely randomly.

Pair Corralation between Amazon and SSgA SPDR

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the SSgA SPDR. In addition to that, Amazon is 5.87 times more volatile than SSgA SPDR ETFs. It trades about -0.12 of its total potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.19 per unit of volatility. If you would invest  2,803  in SSgA SPDR ETFs on December 29, 2024 and sell it today you would earn a total of  104.00  from holding SSgA SPDR ETFs or generate 3.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Amazon Inc  vs.  SSgA SPDR ETFs

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic 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.

SSgA SPDR ETFs

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SSgA SPDR ETFs are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SSgA SPDR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Amazon and SSgA SPDR

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

The idea behind Amazon Inc and SSgA SPDR ETFs 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.