Correlation Between Amazon and Midcap Growth

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

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

Diversification Opportunities for Amazon and Midcap Growth

0.14

Correlation Coefficient

Amazon  Midcap Growth

Average diversification

The 3 months correlation between Amazon and Midcap is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Midcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Growth 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 Midcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Growth has no effect on the direction of Amazon i.e., Amazon and Midcap Growth go up and down completely randomly.

Pair Corralation between Amazon and Midcap Growth

Given the investment horizon of 90 days Amazon Inc is expected to generate 0.45 times more return on investment than Midcap Growth. However, Amazon Inc is 2.22 times less risky than Midcap Growth. It trades about -0.03 of its potential returns per unit of risk. Midcap Growth Fund is currently generating about -0.12 per unit of risk. If you would invest  22,569  in Amazon Inc on July 14, 2025 and sell it today you would lose (932.00) from holding Amazon Inc or give up 4.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	76.92%
Values	Daily Returns

Amazon Inc  vs.  Midcap Growth Fund

Amazon Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Amazon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Midcap Growth

Risk-Adjusted Performance

Weakest

Over the last 90 days Midcap Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in November 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Amazon and Midcap Growth

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

The idea behind Amazon Inc and Midcap Growth Fund 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.