Correlation Between Amazon and Rocket Companies

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

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

Diversification Opportunities for Amazon and Rocket Companies

0.77

Correlation Coefficient

Amazon  Rocket Companies

Poor diversification

The 3 months correlation between Amazon and Rocket is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Rocket Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Companies 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 Rocket Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Companies has no effect on the direction of Amazon i.e., Amazon and Rocket Companies go up and down completely randomly.

Pair Corralation between Amazon and Rocket Companies

Given the investment horizon of 90 days Amazon Inc is expected to generate 0.49 times more return on investment than Rocket Companies. However, Amazon Inc is 2.05 times less risky than Rocket Companies. It trades about 0.22 of its potential returns per unit of risk. Rocket Companies is currently generating about 0.09 per unit of risk. If you would invest  18,998  in Amazon Inc on May 2, 2025 and sell it today you would earn a total of  4,413  from holding Amazon Inc or generate 23.23% return on investment over 90 days.

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

Amazon Inc  vs.  Rocket Companies

Amazon Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.

Rocket Companies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rocket Companies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, Rocket Companies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amazon and Rocket Companies

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

The idea behind Amazon Inc and Rocket Companies 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.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.