Correlation Between Amazon CDR and Galway Metals
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Galway Metals 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 Galway Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Galway Metals, you can compare the effects of market volatilities on Amazon CDR and Galway Metals 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 Galway Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Galway Metals.
Diversification Opportunities for Amazon CDR and Galway Metals
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and Galway is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Galway Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galway Metals 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 Galway Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galway Metals has no effect on the direction of Amazon CDR i.e., Amazon CDR and Galway Metals go up and down completely randomly.
Pair Corralation between Amazon CDR and Galway Metals
Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.41 times more return on investment than Galway Metals. However, Amazon CDR is 2.43 times less risky than Galway Metals. It trades about 0.15 of its potential returns per unit of risk. Galway Metals is currently generating about -0.24 per unit of risk. If you would invest 2,278 in Amazon CDR on August 30, 2024 and sell it today you would earn a total of 173.00 from holding Amazon CDR or generate 7.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. Galway Metals
Performance |
| Timeline |
| Amazon CDR |
| Galway Metals |
Amazon CDR and Galway Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Galway Metals
The main advantage of trading using opposite Amazon CDR and Galway Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Galway Metals 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 Galway Metals will offset losses from the drop in Galway Metals' long position.| Amazon CDR vs. Eros Resources Corp | Amazon CDR vs. Apple Inc CDR | Amazon CDR vs. European Residential Real | Amazon CDR vs. Canadian Utilities Ltd |
| Galway Metals vs. First Majestic Silver | Galway Metals vs. Ivanhoe Energy | Galway Metals vs. Orezone Gold Corp | Galway Metals vs. Faraday Copper 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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