Correlation Between GrowGeneration Corp and Amazon

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

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

Diversification Opportunities for GrowGeneration Corp and Amazon

-0.73

Correlation Coefficient

GrowGeneration Corp  Amazon

Pay attention - limited upside

The 3 months correlation between GrowGeneration and Amazon is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding GrowGeneration Corp and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and GrowGeneration Corp 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 GrowGeneration Corp are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of GrowGeneration Corp i.e., GrowGeneration Corp and Amazon go up and down completely randomly.

Pair Corralation between GrowGeneration Corp and Amazon

Given the investment horizon of 90 days GrowGeneration Corp is expected to under-perform the Amazon. In addition to that, GrowGeneration Corp is 2.37 times more volatile than Amazon Inc. It trades about -0.1 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.17 per unit of volatility. If you would invest  19,950  in Amazon Inc on October 6, 2024 and sell it today you would earn a total of  2,469  from holding Amazon Inc or generate 12.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

GrowGeneration Corp  vs.  Amazon Inc

GrowGeneration Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GrowGeneration Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Amazon Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 15 (%) 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.

Pair Trading with GrowGeneration Corp and Amazon

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

The idea behind GrowGeneration Corp and Amazon Inc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.