Correlation Between Amazon CDR and HOME DEPOT
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and HOME DEPOT 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 HOME DEPOT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and HOME DEPOT CDR, you can compare the effects of market volatilities on Amazon CDR and HOME DEPOT 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 HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and HOME DEPOT.
Diversification Opportunities for Amazon CDR and HOME DEPOT
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Amazon and HOME is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and HOME DEPOT CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT 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 HOME DEPOT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOME DEPOT CDR has no effect on the direction of Amazon CDR i.e., Amazon CDR and HOME DEPOT go up and down completely randomly.
Pair Corralation between Amazon CDR and HOME DEPOT
Assuming the 90 days trading horizon Amazon CDR is expected to generate 1.06 times more return on investment than HOME DEPOT. However, Amazon CDR is 1.06 times more volatile than HOME DEPOT CDR. It trades about 0.2 of its potential returns per unit of risk. HOME DEPOT CDR is currently generating about 0.19 per unit of risk. If you would invest 2,705 in Amazon CDR on November 7, 2024 and sell it today you would earn a total of 171.00 from holding Amazon CDR or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. HOME DEPOT CDR
Performance |
| Timeline |
| Amazon CDR |
| HOME DEPOT CDR |
Amazon CDR and HOME DEPOT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and HOME DEPOT
The main advantage of trading using opposite Amazon CDR and HOME DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, HOME DEPOT 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 HOME DEPOT will offset losses from the drop in HOME DEPOT's long position.| Amazon CDR vs. Toronto Dominion Bank | Amazon CDR vs. Mako Mining Corp | Amazon CDR vs. Royal Road Minerals | Amazon CDR vs. Gamehost |
| HOME DEPOT vs. Micron Technology, | HOME DEPOT vs. Calian Technologies | HOME DEPOT vs. CVW CleanTech | HOME DEPOT vs. Firan Technology Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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