Correlation Between Amazon and Richardson Electronics
Can any of the company-specific risk be diversified away by investing in both Amazon and Richardson Electronics 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 Richardson Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Richardson Electronics, you can compare the effects of market volatilities on Amazon and Richardson Electronics 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 Richardson Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Richardson Electronics.
Diversification Opportunities for Amazon and Richardson Electronics
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and Richardson is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Richardson Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richardson Electronics 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 Richardson Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richardson Electronics has no effect on the direction of Amazon i.e., Amazon and Richardson Electronics go up and down completely randomly.
Pair Corralation between Amazon and Richardson Electronics
Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Richardson Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Amazon Inc is 2.04 times less risky than Richardson Electronics. The stock trades about -0.05 of its potential returns per unit of risk. The Richardson Electronics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 809.00 in Richardson Electronics on July 20, 2025 and sell it today you would earn a total of 124.00 from holding Richardson Electronics or generate 15.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.48% |
| Values | Daily Returns |
Amazon Inc vs. Richardson Electronics
Performance |
| Timeline |
| Amazon Inc |
| Richardson Electronics |
Amazon and Richardson Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Richardson Electronics
The main advantage of trading using opposite Amazon and Richardson Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Richardson Electronics 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 Richardson Electronics will offset losses from the drop in Richardson Electronics' long position.| Amazon vs. Alibaba Group Holding | Amazon vs. ATRenew Inc DRC | Amazon vs. Liquidity Services | Amazon vs. GameStop Corp |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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