Correlation Between Amazon CDR and Dorel Industries
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Dorel Industries 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 Dorel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Dorel Industries, you can compare the effects of market volatilities on Amazon CDR and Dorel Industries 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 Dorel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Dorel Industries.
Diversification Opportunities for Amazon CDR and Dorel Industries
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amazon and Dorel is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Dorel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dorel Industries 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 Dorel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dorel Industries has no effect on the direction of Amazon CDR i.e., Amazon CDR and Dorel Industries go up and down completely randomly.
Pair Corralation between Amazon CDR and Dorel Industries
Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.6 times more return on investment than Dorel Industries. However, Amazon CDR is 1.68 times less risky than Dorel Industries. It trades about -0.46 of its potential returns per unit of risk. Dorel Industries is currently generating about -0.31 per unit of risk. If you would invest 2,876 in Amazon CDR on December 6, 2024 and sell it today you would lose (499.00) from holding Amazon CDR or give up 17.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Amazon CDR vs. Dorel Industries
Performance |
| Timeline |
| Amazon CDR |
| Dorel Industries |
Amazon CDR and Dorel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Dorel Industries
The main advantage of trading using opposite Amazon CDR and Dorel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Dorel Industries 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 Dorel Industries will offset losses from the drop in Dorel Industries' long position.| Amazon CDR vs. Plaza Retail REIT | Amazon CDR vs. Nicola Mining | Amazon CDR vs. Sun Peak Metals | Amazon CDR vs. Primaris Retail RE |
| Dorel Industries vs. Transcontinental | Dorel Industries vs. Gildan Activewear | Dorel Industries vs. Cogeco Communications | Dorel Industries vs. High Liner Foods |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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