Correlation Between Amazon CDR and Leons Furniture
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Leons Furniture 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 Leons Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Leons Furniture Limited, you can compare the effects of market volatilities on Amazon CDR and Leons Furniture 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 Leons Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Leons Furniture.
Diversification Opportunities for Amazon CDR and Leons Furniture
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and Leons is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Leons Furniture Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leons Furniture 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 Leons Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leons Furniture has no effect on the direction of Amazon CDR i.e., Amazon CDR and Leons Furniture go up and down completely randomly.
Pair Corralation between Amazon CDR and Leons Furniture
Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.92 times more return on investment than Leons Furniture. However, Amazon CDR is 1.08 times less risky than Leons Furniture. It trades about 0.09 of its potential returns per unit of risk. Leons Furniture Limited is currently generating about 0.06 per unit of risk. If you would invest 1,119 in Amazon CDR on August 24, 2024 and sell it today you would earn a total of 1,232 from holding Amazon CDR or generate 110.1% 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. Leons Furniture Limited
Performance |
| Timeline |
| Amazon CDR |
| Leons Furniture |
Amazon CDR and Leons Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Leons Furniture
The main advantage of trading using opposite Amazon CDR and Leons Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Leons Furniture 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 Leons Furniture will offset losses from the drop in Leons Furniture's long position.| Amazon CDR vs. Quorum Information Technologies | Amazon CDR vs. Quisitive Technology Solutions | Amazon CDR vs. Canadian Utilities Limited | Amazon CDR vs. Information Services |
| Leons Furniture vs. Restaurant Brands International | Leons Furniture vs. Enghouse Systems | Leons Furniture vs. Metro Inc | Leons Furniture vs. goeasy |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |