Correlation Between Amazon CDR and Altus Group
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Altus Group 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 CDR and Altus Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Altus Group Limited, you can compare the effects of market volatilities on Amazon CDR and Altus Group 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 CDR with a short position of Altus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Altus Group.
Diversification Opportunities for Amazon CDR and Altus Group
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amazon and Altus is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Altus Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altus Group Limited and Amazon CDR 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 CDR are associated (or correlated) with Altus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altus Group Limited has no effect on the direction of Amazon CDR i.e., Amazon CDR and Altus Group go up and down completely randomly.
Pair Corralation between Amazon CDR and Altus Group
Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.92 times more return on investment than Altus Group. However, Amazon CDR is 1.08 times less risky than Altus Group. It trades about 0.09 of its potential returns per unit of risk. Altus Group Limited is currently generating about 0.03 per unit of risk. If you would invest 1,112 in Amazon CDR on September 2, 2024 and sell it today you would earn a total of 1,365 from holding Amazon CDR or generate 122.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. Altus Group Limited
Performance |
| Timeline |
| Amazon CDR |
| Altus Group Limited |
Amazon CDR and Altus Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Altus Group
The main advantage of trading using opposite Amazon CDR and Altus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Altus Group 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 Altus Group will offset losses from the drop in Altus Group's long position.| Amazon CDR vs. iShares Canadian HYBrid | Amazon CDR vs. Altagas Cum Red | Amazon CDR vs. European Residential Real | Amazon CDR vs. iShares Fundamental Hedged |
| Altus Group vs. Colliers International Group | Altus Group vs. FirstService Corp | Altus Group vs. Winpak | Altus Group vs. Ritchie Bros Auctioneers |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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