amzn

The statistical relationship between Amazon’s (AMZN) stock price movements and the broader market, often represented by an index like the S&P 500, is crucial for investors. Beta quantifies this relationship; a beta of 1 suggests AMZN’s price moves in tandem with the market, while a beta greater than 1 indicates higher volatility relative to the market, and a beta less than 1 suggests lower volatility. Volatility itself measures the degree of price fluctuation over a given period, reflecting the risk associated with the stock. The Sharpe Ratio combines both risk and return, measuring the excess return earned per unit of risk, with risk defined as the standard deviation of returns. For example, if AMZN has a beta of 1.2, it’s expected to be 20% more volatile than the market. A Sharpe Ratio of 0.8 would indicate that for every unit of risk taken, the investment generates 0.8 units of excess return.

These metrics provide critical insights into AMZN’s risk-adjusted performance. A higher Sharpe Ratio generally suggests a more attractive investment, indicating better returns for the level of risk undertaken. Analyzing the beta and volatility helps investors understand the potential price swings and manage their portfolio risk accordingly. These measures are often used in conjunction with other fundamental and technical analysis to formulate investment strategies. Monitoring historical trends in these indicators allows investors to assess how AMZN’s risk profile has evolved over time, and potentially predict future performance relative to the overall market and its sector peers. Understanding these risk-adjusted performance factors is key to informed investment decisions regarding AMZN.

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