Correlation Between Advanced Micro and Diamond Estates
Can any of the company-specific risk be diversified away by investing in both Advanced Micro and Diamond Estates 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 Advanced Micro and Diamond Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Micro Devices and Diamond Estates Wines, you can compare the effects of market volatilities on Advanced Micro and Diamond Estates 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 Advanced Micro with a short position of Diamond Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and Diamond Estates.
Diversification Opportunities for Advanced Micro and Diamond Estates
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Advanced and Diamond is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and Diamond Estates Wines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Estates Wines and Advanced Micro 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 Advanced Micro Devices are associated (or correlated) with Diamond Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Estates Wines has no effect on the direction of Advanced Micro i.e., Advanced Micro and Diamond Estates go up and down completely randomly.
Pair Corralation between Advanced Micro and Diamond Estates
Assuming the 90 days trading horizon Advanced Micro Devices is expected to generate 0.56 times more return on investment than Diamond Estates. However, Advanced Micro Devices is 1.78 times less risky than Diamond Estates. It trades about 0.06 of its potential returns per unit of risk. Diamond Estates Wines is currently generating about -0.01 per unit of risk. If you would invest 1,377 in Advanced Micro Devices on August 28, 2024 and sell it today you would earn a total of 1,236 from holding Advanced Micro Devices or generate 89.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Micro Devices vs. Diamond Estates Wines
Performance |
| Timeline |
| Advanced Micro Devices |
| Diamond Estates Wines |
Advanced Micro and Diamond Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Micro and Diamond Estates
The main advantage of trading using opposite Advanced Micro and Diamond Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro position performs unexpectedly, Diamond Estates 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 Diamond Estates will offset losses from the drop in Diamond Estates' long position.| Advanced Micro vs. Lite Access Technologies | Advanced Micro vs. Braille Energy Systems | Advanced Micro vs. iShares Canadian HYBrid | Advanced Micro vs. Altagas Cum Red |
| Diamond Estates vs. Quisitive Technology Solutions | Diamond Estates vs. Lion One Metals | Diamond Estates vs. Northstar Clean Technologies | Diamond Estates vs. Xtract One Technologies |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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