Correlation Between Amazon CDR and Frequency Exchange
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Frequency Exchange 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 Frequency Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Frequency Exchange Corp, you can compare the effects of market volatilities on Amazon CDR and Frequency Exchange 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 Frequency Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Frequency Exchange.
Diversification Opportunities for Amazon CDR and Frequency Exchange
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amazon and Frequency is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Frequency Exchange Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frequency Exchange Corp 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 Frequency Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frequency Exchange Corp has no effect on the direction of Amazon CDR i.e., Amazon CDR and Frequency Exchange go up and down completely randomly.
Pair Corralation between Amazon CDR and Frequency Exchange
Assuming the 90 days trading horizon Amazon CDR is expected to generate 6.8 times less return on investment than Frequency Exchange. But when comparing it to its historical volatility, Amazon CDR is 9.05 times less risky than Frequency Exchange. It trades about 0.11 of its potential returns per unit of risk. Frequency Exchange Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9.50 in Frequency Exchange Corp on September 12, 2024 and sell it today you would earn a total of 17.50 from holding Frequency Exchange Corp or generate 184.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Amazon CDR vs. Frequency Exchange Corp
Performance |
| Timeline |
| Amazon CDR |
| Frequency Exchange Corp |
Amazon CDR and Frequency Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Frequency Exchange
The main advantage of trading using opposite Amazon CDR and Frequency Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Frequency Exchange 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 Frequency Exchange will offset losses from the drop in Frequency Exchange's long position.| Amazon CDR vs. Data Communications Management | Amazon CDR vs. Marimaca Copper Corp | Amazon CDR vs. Rogers Communications | Amazon CDR vs. Maple Leaf Foods |
| Frequency Exchange vs. Quisitive Technology Solutions | Frequency Exchange vs. Sparx Technology | Frequency Exchange vs. Wishpond Technologies | Frequency Exchange vs. Quorum Information 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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