Correlation Between Amazon CDR and Ascot Resources
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Ascot Resources 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 Ascot Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Ascot Resources, you can compare the effects of market volatilities on Amazon CDR and Ascot Resources 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 Ascot Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Ascot Resources.
Diversification Opportunities for Amazon CDR and Ascot Resources
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and Ascot is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Ascot Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascot Resources 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 Ascot Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascot Resources has no effect on the direction of Amazon CDR i.e., Amazon CDR and Ascot Resources go up and down completely randomly.
Pair Corralation between Amazon CDR and Ascot Resources
Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.23 times more return on investment than Ascot Resources. However, Amazon CDR is 4.3 times less risky than Ascot Resources. It trades about 0.11 of its potential returns per unit of risk. Ascot Resources is currently generating about -0.02 per unit of risk. If you would invest 2,199 in Amazon CDR on October 26, 2024 and sell it today you would earn a total of 597.00 from holding Amazon CDR or generate 27.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. Ascot Resources
Performance |
| Timeline |
| Amazon CDR |
| Ascot Resources |
Amazon CDR and Ascot Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Ascot Resources
The main advantage of trading using opposite Amazon CDR and Ascot Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Ascot Resources 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 Ascot Resources will offset losses from the drop in Ascot Resources' long position.| Amazon CDR vs. Bausch Health Companies | Amazon CDR vs. Renoworks Software | Amazon CDR vs. NeuPath Health | Amazon CDR vs. Highwood Asset Management |
| Ascot Resources vs. Micron Technology, | Ascot Resources vs. Converge Technology Solutions | Ascot Resources vs. Rocky Mountain Liquor | Ascot Resources vs. Data Communications Management |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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