Correlation Between Amazon CDR and Fortis Pref
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Fortis Pref 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 Fortis Pref into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Fortis Pref M, you can compare the effects of market volatilities on Amazon CDR and Fortis Pref 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 Fortis Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Fortis Pref.
Diversification Opportunities for Amazon CDR and Fortis Pref
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Amazon and Fortis is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Fortis Pref M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortis Pref M 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 Fortis Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortis Pref M has no effect on the direction of Amazon CDR i.e., Amazon CDR and Fortis Pref go up and down completely randomly.
Pair Corralation between Amazon CDR and Fortis Pref
Assuming the 90 days trading horizon Amazon CDR is expected to generate 2.14 times more return on investment than Fortis Pref. However, Amazon CDR is 2.14 times more volatile than Fortis Pref M. It trades about 0.1 of its potential returns per unit of risk. Fortis Pref M is currently generating about 0.12 per unit of risk. If you would invest 1,768 in Amazon CDR on September 14, 2024 and sell it today you would earn a total of 962.00 from holding Amazon CDR or generate 54.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Amazon CDR vs. Fortis Pref M
Performance |
| Timeline |
| Amazon CDR |
| Fortis Pref M |
Amazon CDR and Fortis Pref Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Fortis Pref
The main advantage of trading using opposite Amazon CDR and Fortis Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Fortis Pref 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 Fortis Pref will offset losses from the drop in Fortis Pref's long position.| Amazon CDR vs. KDA Group | Amazon CDR vs. iShares Canadian HYBrid | Amazon CDR vs. Altagas Cum Red | Amazon CDR vs. European Residential Real |
| Fortis Pref vs. Microsoft Corp CDR | Fortis Pref vs. Apple Inc CDR | Fortis Pref vs. Alphabet Inc CDR | Fortis Pref vs. Amazon CDR |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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