Correlation Between Amazon CDR and Lumine
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Lumine 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 Lumine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Lumine Group, you can compare the effects of market volatilities on Amazon CDR and Lumine 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 Lumine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Lumine.
Diversification Opportunities for Amazon CDR and Lumine
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amazon and Lumine is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Lumine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumine Group 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 Lumine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumine Group has no effect on the direction of Amazon CDR i.e., Amazon CDR and Lumine go up and down completely randomly.
Pair Corralation between Amazon CDR and Lumine
Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.78 times more return on investment than Lumine. However, Amazon CDR is 1.28 times less risky than Lumine. It trades about 0.18 of its potential returns per unit of risk. Lumine Group is currently generating about 0.11 per unit of risk. If you would invest 2,552 in Amazon CDR on September 14, 2024 and sell it today you would earn a total of 178.00 from holding Amazon CDR or generate 6.97% 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. Lumine Group
Performance |
| Timeline |
| Amazon CDR |
| Lumine Group |
Amazon CDR and Lumine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Lumine
The main advantage of trading using opposite Amazon CDR and Lumine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Lumine 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 Lumine will offset losses from the drop in Lumine'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 |
| Lumine vs. Adcore Inc | Lumine vs. Emerge Commerce | Lumine vs. Quisitive Technology Solutions | Lumine vs. DGTL 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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