Correlation Between Amazon and YT REALTY

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

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

Diversification Opportunities for Amazon and YT REALTY

-0.65

Correlation Coefficient

Amazon  YT REALTY

Excellent diversification

The 3 months correlation between Amazon and YTZ is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and YT REALTY GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YT REALTY GRP 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 YT REALTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YT REALTY GRP has no effect on the direction of Amazon i.e., Amazon and YT REALTY go up and down completely randomly.

Pair Corralation between Amazon and YT REALTY

Assuming the 90 days trading horizon Amazon is expected to generate 18.62 times less return on investment than YT REALTY. But when comparing it to its historical volatility, Amazon Inc is 4.61 times less risky than YT REALTY. It trades about 0.03 of its potential returns per unit of risk. YT REALTY GRP is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3.20  in YT REALTY GRP on February 5, 2024 and sell it today you would earn a total of  0.50  from holding YT REALTY GRP or generate 15.62% return on investment over 90 days.

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

Amazon Inc  vs.  YT REALTY GRP

Amazon Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Amazon may actually be approaching a critical reversion point that can send shares even higher in June 2024.

YT REALTY GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YT REALTY GRP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, YT REALTY is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Amazon and YT REALTY

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

The idea behind Amazon Inc and YT REALTY GRP 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.