Correlation Between Amazon CDR and Lightspeed Commerce
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Lightspeed Commerce 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 Lightspeed Commerce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Lightspeed Commerce, you can compare the effects of market volatilities on Amazon CDR and Lightspeed Commerce 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 Lightspeed Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Lightspeed Commerce.
Diversification Opportunities for Amazon CDR and Lightspeed Commerce
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amazon and Lightspeed is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Lightspeed Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lightspeed Commerce 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 Lightspeed Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lightspeed Commerce has no effect on the direction of Amazon CDR i.e., Amazon CDR and Lightspeed Commerce go up and down completely randomly.
Pair Corralation between Amazon CDR and Lightspeed Commerce
Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.62 times more return on investment than Lightspeed Commerce. However, Amazon CDR is 1.62 times less risky than Lightspeed Commerce. It trades about 0.09 of its potential returns per unit of risk. Lightspeed Commerce is currently generating about 0.03 per unit of risk. If you would invest 1,132 in Amazon CDR on September 3, 2024 and sell it today you would earn a total of 1,345 from holding Amazon CDR or generate 118.82% 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. Lightspeed Commerce
Performance |
| Timeline |
| Amazon CDR |
| Lightspeed Commerce |
Amazon CDR and Lightspeed Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Lightspeed Commerce
The main advantage of trading using opposite Amazon CDR and Lightspeed Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Lightspeed Commerce 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 Lightspeed Commerce will offset losses from the drop in Lightspeed Commerce's 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 |
| Lightspeed Commerce vs. Shopify | Lightspeed Commerce vs. WELL Health Technologies | Lightspeed Commerce vs. BlackBerry | Lightspeed Commerce vs. Docebo Inc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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