Correlation Between Amazon CDR and Kinaxis
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Kinaxis 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 Kinaxis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Kinaxis, you can compare the effects of market volatilities on Amazon CDR and Kinaxis 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 Kinaxis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Kinaxis.
Diversification Opportunities for Amazon CDR and Kinaxis
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amazon and Kinaxis is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Kinaxis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinaxis 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 Kinaxis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinaxis has no effect on the direction of Amazon CDR i.e., Amazon CDR and Kinaxis go up and down completely randomly.
Pair Corralation between Amazon CDR and Kinaxis
Assuming the 90 days trading horizon Amazon CDR is expected to generate 1.12 times less return on investment than Kinaxis. In addition to that, Amazon CDR is 1.02 times more volatile than Kinaxis. It trades about 0.17 of its total potential returns per unit of risk. Kinaxis is currently generating about 0.2 per unit of volatility. If you would invest 15,850 in Kinaxis on September 3, 2024 and sell it today you would earn a total of 2,497 from holding Kinaxis or generate 15.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. Kinaxis
Performance |
| Timeline |
| Amazon CDR |
| Kinaxis |
Amazon CDR and Kinaxis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Kinaxis
The main advantage of trading using opposite Amazon CDR and Kinaxis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Kinaxis 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 Kinaxis will offset losses from the drop in Kinaxis' long position.| Amazon CDR vs. CI Financial Corp | Amazon CDR vs. Canlan Ice Sports | Amazon CDR vs. Everyday People Financial | Amazon CDR vs. Brookfield Office Properties |
| Kinaxis vs. Open Text Corp | Kinaxis vs. Enghouse Systems | Kinaxis vs. Docebo Inc | Kinaxis vs. Descartes Systems 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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