Correlation Between Onewater Marine and Amazon

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

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

Diversification Opportunities for Onewater Marine and Amazon

-0.02

Correlation Coefficient

Onewater Marine  Amazon

Good diversification

The 3 months correlation between Onewater and Amazon is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Onewater Marine and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Onewater Marine 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 Onewater Marine 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 Onewater Marine i.e., Onewater Marine and Amazon go up and down completely randomly.

Pair Corralation between Onewater Marine and Amazon

Given the investment horizon of 90 days Onewater Marine is expected to under-perform the Amazon. In addition to that, Onewater Marine is 1.85 times more volatile than Amazon Inc. It trades about -0.33 of its total potential returns per unit of risk. Amazon Inc is currently generating about -0.08 per unit of volatility. If you would invest  18,097  in Amazon Inc on February 1, 2024 and sell it today you would lose (597.00) from holding Amazon Inc or give up 3.3% of portfolio value over 90 days.

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

Onewater Marine  vs.  Amazon Inc

Onewater Marine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Onewater Marine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Amazon Inc

Risk-Adjusted Performance

7 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Amazon may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Onewater Marine and Amazon

The main advantage of trading using opposite Onewater Marine and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Onewater Marine 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.

The idea behind Onewater Marine and Amazon Inc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.