Correlation Between Amazon CDR and High Liner
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and High Liner 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 High Liner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and High Liner Foods, you can compare the effects of market volatilities on Amazon CDR and High Liner 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 High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and High Liner.
Diversification Opportunities for Amazon CDR and High Liner
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amazon and High is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods 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 High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of Amazon CDR i.e., Amazon CDR and High Liner go up and down completely randomly.
Pair Corralation between Amazon CDR and High Liner
Assuming the 90 days trading horizon Amazon CDR is expected to generate 1.17 times more return on investment than High Liner. However, Amazon CDR is 1.17 times more volatile than High Liner Foods. It trades about 0.24 of its potential returns per unit of risk. High Liner Foods is currently generating about 0.01 per unit of risk. If you would invest 2,618 in Amazon CDR on November 3, 2024 and sell it today you would earn a total of 206.00 from holding Amazon CDR or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. High Liner Foods
Performance |
| Timeline |
| Amazon CDR |
| High Liner Foods |
Amazon CDR and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and High Liner
The main advantage of trading using opposite Amazon CDR and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| Amazon CDR vs. Questor Technology | Amazon CDR vs. Wilmington Capital Management | Amazon CDR vs. US Financial 15 | Amazon CDR vs. IGM Financial |
| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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