Correlation Between Amazon CDR and MCAN Mortgage
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and MCAN Mortgage 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 MCAN Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and MCAN Mortgage, you can compare the effects of market volatilities on Amazon CDR and MCAN Mortgage 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 MCAN Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and MCAN Mortgage.
Diversification Opportunities for Amazon CDR and MCAN Mortgage
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and MCAN is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and MCAN Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCAN Mortgage 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 MCAN Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCAN Mortgage has no effect on the direction of Amazon CDR i.e., Amazon CDR and MCAN Mortgage go up and down completely randomly.
Pair Corralation between Amazon CDR and MCAN Mortgage
Assuming the 90 days trading horizon Amazon CDR is expected to generate 1.74 times more return on investment than MCAN Mortgage. However, Amazon CDR is 1.74 times more volatile than MCAN Mortgage. It trades about 0.09 of its potential returns per unit of risk. MCAN Mortgage is currently generating about 0.07 per unit of risk. If you would invest 1,245 in Amazon CDR on November 27, 2024 and sell it today you would earn a total of 1,278 from holding Amazon CDR or generate 102.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. MCAN Mortgage
Performance |
| Timeline |
| Amazon CDR |
| MCAN Mortgage |
Amazon CDR and MCAN Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and MCAN Mortgage
The main advantage of trading using opposite Amazon CDR and MCAN Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, MCAN Mortgage 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 MCAN Mortgage will offset losses from the drop in MCAN Mortgage's long position.| Amazon CDR vs. Titan Mining Corp | Amazon CDR vs. Micron Technology, | Amazon CDR vs. Perseus Mining | Amazon CDR vs. NeXGold Mining Corp |
| MCAN Mortgage vs. Timbercreek Financial Corp | MCAN Mortgage vs. Atrium Mortgage Investment | MCAN Mortgage vs. Firm Capital Mortgage | MCAN Mortgage vs. First National Financial |
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.
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