Correlation Between Amazon CDR and CHEVRON CDR
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and CHEVRON CDR 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 CHEVRON CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and CHEVRON CDR, you can compare the effects of market volatilities on Amazon CDR and CHEVRON CDR 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 CHEVRON CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and CHEVRON CDR.
Diversification Opportunities for Amazon CDR and CHEVRON CDR
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amazon and CHEVRON is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and CHEVRON CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHEVRON CDR 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 CHEVRON CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHEVRON CDR has no effect on the direction of Amazon CDR i.e., Amazon CDR and CHEVRON CDR go up and down completely randomly.
Pair Corralation between Amazon CDR and CHEVRON CDR
Assuming the 90 days trading horizon Amazon CDR is expected to generate 1.51 times more return on investment than CHEVRON CDR. However, Amazon CDR is 1.51 times more volatile than CHEVRON CDR. It trades about 0.07 of its potential returns per unit of risk. CHEVRON CDR is currently generating about 0.04 per unit of risk. If you would invest 2,141 in Amazon CDR on September 1, 2024 and sell it today you would earn a total of 336.00 from holding Amazon CDR or generate 15.69% 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. CHEVRON CDR
Performance |
| Timeline |
| Amazon CDR |
| CHEVRON CDR |
Amazon CDR and CHEVRON CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and CHEVRON CDR
The main advantage of trading using opposite Amazon CDR and CHEVRON CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, CHEVRON CDR 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 CHEVRON CDR will offset losses from the drop in CHEVRON CDR'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 |
| CHEVRON CDR vs. Enbridge Pref 5 | CHEVRON CDR vs. Enbridge Pref 11 | CHEVRON CDR vs. Enbridge Pref L | CHEVRON CDR vs. E Split Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |