Correlation Between Amazon and Elevance Health,

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

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

Diversification Opportunities for Amazon and Elevance Health,

-0.16

Correlation Coefficient

Amazon  Elevance Health,

Good diversification

The 3 months correlation between Amazon and Elevance is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Elevance Health, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elevance Health, 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 Elevance Health,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elevance Health, has no effect on the direction of Amazon i.e., Amazon and Elevance Health, go up and down completely randomly.

Pair Corralation between Amazon and Elevance Health,

Assuming the 90 days trading horizon Amazon Inc is expected to generate 1.74 times more return on investment than Elevance Health,. However, Amazon is 1.74 times more volatile than Elevance Health,. It trades about 0.21 of its potential returns per unit of risk. Elevance Health, is currently generating about -0.02 per unit of risk. If you would invest  5,974  in Amazon Inc on October 8, 2024 and sell it today you would earn a total of  911.00  from holding Amazon Inc or generate 15.25% 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.  Elevance Health,

Amazon Inc

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Amazon sustained solid returns over the last few months and may actually be approaching a breakup point.

Elevance Health,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elevance Health, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Amazon and Elevance Health,

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

The idea behind Amazon Inc and Elevance Health, 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.