Correlation Between Amazon CDR and Mullen
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Mullen 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 Mullen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Mullen Group, you can compare the effects of market volatilities on Amazon CDR and Mullen 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 Mullen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Mullen.
Diversification Opportunities for Amazon CDR and Mullen
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amazon and Mullen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Mullen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen 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 Mullen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mullen Group has no effect on the direction of Amazon CDR i.e., Amazon CDR and Mullen go up and down completely randomly.
Pair Corralation between Amazon CDR and Mullen
Assuming the 90 days trading horizon Amazon CDR is expected to generate 1.28 times less return on investment than Mullen. In addition to that, Amazon CDR is 1.02 times more volatile than Mullen Group. It trades about 0.15 of its total potential returns per unit of risk. Mullen Group is currently generating about 0.2 per unit of volatility. If you would invest 1,412 in Mullen Group on August 24, 2024 and sell it today you would earn a total of 135.00 from holding Mullen Group or generate 9.56% 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. Mullen Group
Performance |
| Timeline |
| Amazon CDR |
| Mullen Group |
Amazon CDR and Mullen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Mullen
The main advantage of trading using opposite Amazon CDR and Mullen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Mullen 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 Mullen will offset losses from the drop in Mullen's long position.| Amazon CDR vs. Canlan Ice Sports | Amazon CDR vs. North American Financial | Amazon CDR vs. Income Financial Trust | Amazon CDR vs. Canadian Imperial Bank |
| Mullen vs. Pason Systems | Mullen vs. Westshore Terminals Investment | Mullen vs. Superior Plus Corp | Mullen vs. Gibson Energy |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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