Correlation Between Amazon and ETF Series
Can any of the company-specific risk be diversified away by investing in both Amazon and ETF Series 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 ETF Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and ETF Series Solutions, you can compare the effects of market volatilities on Amazon and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and ETF Series.
Diversification Opportunities for Amazon and ETF Series
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Amazon and ETF is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Amazon i.e., Amazon and ETF Series go up and down completely randomly.
Pair Corralation between Amazon and ETF Series
Given the investment horizon of 90 days Amazon Inc is expected to generate 1.9 times more return on investment than ETF Series. However, Amazon is 1.9 times more volatile than ETF Series Solutions. It trades about 0.25 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.3 per unit of risk. If you would invest 18,635 in Amazon Inc on April 4, 2025 and sell it today you would earn a total of 3,706 from holding Amazon Inc or generate 19.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. ETF Series Solutions
Performance |
| Timeline |
| Amazon Inc |
| ETF Series Solutions |
Amazon and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and ETF Series
The main advantage of trading using opposite Amazon and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.The idea behind Amazon Inc and ETF Series Solutions 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.| ETF Series vs. ZVOL | ETF Series vs. Listed Funds Trust | ETF Series vs. ETRACS 2x Leveraged | ETF Series vs. FT Vest Equity |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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