Correlation Between Amazon CDR and Kits Eyecare
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Kits Eyecare 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 Kits Eyecare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Kits Eyecare, you can compare the effects of market volatilities on Amazon CDR and Kits Eyecare 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 Kits Eyecare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Kits Eyecare.
Diversification Opportunities for Amazon CDR and Kits Eyecare
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and Kits is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Kits Eyecare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kits Eyecare 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 Kits Eyecare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kits Eyecare has no effect on the direction of Amazon CDR i.e., Amazon CDR and Kits Eyecare go up and down completely randomly.
Pair Corralation between Amazon CDR and Kits Eyecare
Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.96 times more return on investment than Kits Eyecare. However, Amazon CDR is 1.05 times less risky than Kits Eyecare. It trades about 0.23 of its potential returns per unit of risk. Kits Eyecare is currently generating about -0.07 per unit of risk. If you would invest 2,493 in Amazon CDR on September 13, 2024 and sell it today you would earn a total of 237.00 from holding Amazon CDR or generate 9.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. Kits Eyecare
Performance |
| Timeline |
| Amazon CDR |
| Kits Eyecare |
Amazon CDR and Kits Eyecare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Kits Eyecare
The main advantage of trading using opposite Amazon CDR and Kits Eyecare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Kits Eyecare 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 Kits Eyecare will offset losses from the drop in Kits Eyecare'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 |
| Kits Eyecare vs. Data Communications Management | Kits Eyecare vs. Haivision Systems | Kits Eyecare vs. Thinkific Labs |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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