Correlation Between Amazon CDR and Premium Income
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Premium Income 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 Premium Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Premium Income, you can compare the effects of market volatilities on Amazon CDR and Premium Income 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 Premium Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Premium Income.
Diversification Opportunities for Amazon CDR and Premium Income
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amazon and Premium is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Premium Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Income 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 Premium Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Income has no effect on the direction of Amazon CDR i.e., Amazon CDR and Premium Income go up and down completely randomly.
Pair Corralation between Amazon CDR and Premium Income
Assuming the 90 days trading horizon Amazon CDR is expected to generate 7.12 times less return on investment than Premium Income. But when comparing it to its historical volatility, Amazon CDR is 5.92 times less risky than Premium Income. It trades about 0.09 of its potential returns per unit of risk. Premium Income is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 89.00 in Premium Income on August 29, 2024 and sell it today you would earn a total of 523.00 from holding Premium Income or generate 587.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. Premium Income
Performance |
| Timeline |
| Amazon CDR |
| Premium Income |
Amazon CDR and Premium Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Premium Income
The main advantage of trading using opposite Amazon CDR and Premium Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Premium Income 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 Premium Income will offset losses from the drop in Premium Income's long position.| Amazon CDR vs. Eros Resources Corp | Amazon CDR vs. Apple Inc CDR | Amazon CDR vs. European Residential Real | Amazon CDR vs. Canadian Utilities Ltd |
| Premium Income vs. Sprott Physical Gold | Premium Income vs. Brompton Split Banc | Premium Income vs. TDb Split Corp | Premium Income vs. Prime Dividend Corp |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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