Correlation Between Amazon and Vanguard USD
Can any of the company-specific risk be diversified away by investing in both Amazon and Vanguard USD 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 Vanguard USD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Vanguard USD Corporate, you can compare the effects of market volatilities on Amazon and Vanguard USD 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 Vanguard USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Vanguard USD.
Diversification Opportunities for Amazon and Vanguard USD
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Amazon and Vanguard is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Vanguard USD Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard USD Corporate 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 Vanguard USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard USD Corporate has no effect on the direction of Amazon i.e., Amazon and Vanguard USD go up and down completely randomly.
Pair Corralation between Amazon and Vanguard USD
Given the investment horizon of 90 days Amazon is expected to generate 1.17 times less return on investment than Vanguard USD. In addition to that, Amazon is 3.61 times more volatile than Vanguard USD Corporate. It trades about 0.02 of its total potential returns per unit of risk. Vanguard USD Corporate is currently generating about 0.07 per unit of volatility. If you would invest 4,558 in Vanguard USD Corporate on December 2, 2024 and sell it today you would earn a total of 83.00 from holding Vanguard USD Corporate or generate 1.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 96.83% |
Values | Daily Returns |
Amazon Inc vs. Vanguard USD Corporate
Performance |
Timeline |
Amazon Inc |
Vanguard USD Corporate |
Amazon and Vanguard USD Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amazon and Vanguard USD
The main advantage of trading using opposite Amazon and Vanguard USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Vanguard USD 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 Vanguard USD will offset losses from the drop in Vanguard USD's long position.The idea behind Amazon Inc and Vanguard USD Corporate 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.Vanguard USD vs. Vanguard Global Aggregate | Vanguard USD vs. Vanguard USD Corporate | Vanguard USD vs. Vanguard FTSE All World | Vanguard USD vs. Vanguard SP 500 |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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