Correlation Between Kerry Group and Amazon
Can any of the company-specific risk be diversified away by investing in both Kerry Group 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 Kerry Group and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kerry Group plc and Amazon Inc, you can compare the effects of market volatilities on Kerry Group 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 Kerry Group with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerry Group and Amazon.
Diversification Opportunities for Kerry Group and Amazon
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kerry and Amazon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group plc and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Kerry Group 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 Kerry Group plc 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 Kerry Group i.e., Kerry Group and Amazon go up and down completely randomly.
Pair Corralation between Kerry Group and Amazon
Assuming the 90 days horizon Kerry Group plc is expected to under-perform the Amazon. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kerry Group plc is 1.09 times less risky than Amazon. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Amazon Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 10,498 in Amazon Inc on January 21, 2024 and sell it today you would earn a total of 6,965 from holding Amazon Inc or generate 66.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Kerry Group plc vs. Amazon Inc
Performance |
| Timeline |
| Kerry Group plc |
| Amazon Inc |
Kerry Group and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kerry Group and Amazon
The main advantage of trading using opposite Kerry Group and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry Group 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.| Kerry Group vs. Kellanova | Kerry Group vs. Lancaster Colony | Kerry Group vs. The A2 Milk | Kerry Group vs. Artisan Consumer Goods |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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