Correlation Between Amazon CDR and Labrador Iron
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Labrador Iron 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 Labrador Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Labrador Iron Ore, you can compare the effects of market volatilities on Amazon CDR and Labrador Iron 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 Labrador Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Labrador Iron.
Diversification Opportunities for Amazon CDR and Labrador Iron
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and Labrador is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore 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 Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of Amazon CDR i.e., Amazon CDR and Labrador Iron go up and down completely randomly.
Pair Corralation between Amazon CDR and Labrador Iron
Assuming the 90 days trading horizon Amazon CDR is expected to generate 5.25 times less return on investment than Labrador Iron. In addition to that, Amazon CDR is 1.33 times more volatile than Labrador Iron Ore. It trades about 0.04 of its total potential returns per unit of risk. Labrador Iron Ore is currently generating about 0.26 per unit of volatility. If you would invest 2,883 in Labrador Iron Ore on October 20, 2024 and sell it today you would earn a total of 177.00 from holding Labrador Iron Ore or generate 6.14% 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. Labrador Iron Ore
Performance |
| Timeline |
| Amazon CDR |
| Labrador Iron Ore |
Amazon CDR and Labrador Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Labrador Iron
The main advantage of trading using opposite Amazon CDR and Labrador Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Labrador Iron 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 Labrador Iron will offset losses from the drop in Labrador Iron's long position.| Amazon CDR vs. Cogeco Communications | Amazon CDR vs. Brookfield Investments | Amazon CDR vs. CNJ Capital Investments | Amazon CDR vs. Upstart Investments |
| Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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