Correlation Between BROADSTNET LEADL and Amazon

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

By analyzing existing cross correlation between BROADSTNET LEADL 00025 and Amazon Inc, you can compare the effects of market volatilities on BROADSTNET LEADL 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 BROADSTNET LEADL with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of BROADSTNET LEADL and Amazon.

Diversification Opportunities for BROADSTNET LEADL and Amazon

0.04

Correlation Coefficient

BROADSTNET LEADL  Amazon

Significant diversification

The 3 months correlation between BROADSTNET and Amazon is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding BROADSTNET LEADL 00025 and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and BROADSTNET LEADL 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 BROADSTNET LEADL 00025 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 BROADSTNET LEADL i.e., BROADSTNET LEADL and Amazon go up and down completely randomly.

Pair Corralation between BROADSTNET LEADL and Amazon

Assuming the 90 days trading horizon BROADSTNET LEADL is expected to generate 18.33 times less return on investment than Amazon. But when comparing it to its historical volatility, BROADSTNET LEADL 00025 is 1.06 times less risky than Amazon. It trades about 0.01 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  15,184  in Amazon Inc on April 21, 2025 and sell it today you would earn a total of  4,266  from holding Amazon Inc or generate 28.1% return on investment over 90 days.

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

BROADSTNET LEADL 00025  vs.  Amazon Inc

BROADSTNET LEADL 00025

Risk-Adjusted Performance

Very Weak

Over the last 90 days BROADSTNET LEADL 00025 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BROADSTNET LEADL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Amazon Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Amazon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BROADSTNET LEADL and Amazon

The main advantage of trading using opposite BROADSTNET LEADL and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BROADSTNET LEADL 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 BROADSTNET LEADL 00025 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.