Correlation Between Amazon CDR and Prairie Provident
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Prairie Provident 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 Prairie Provident into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Prairie Provident Resources, you can compare the effects of market volatilities on Amazon CDR and Prairie Provident 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 Prairie Provident. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Prairie Provident.
Diversification Opportunities for Amazon CDR and Prairie Provident
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and Prairie is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Prairie Provident Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prairie Provident 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 Prairie Provident. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prairie Provident has no effect on the direction of Amazon CDR i.e., Amazon CDR and Prairie Provident go up and down completely randomly.
Pair Corralation between Amazon CDR and Prairie Provident
Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.22 times more return on investment than Prairie Provident. However, Amazon CDR is 4.45 times less risky than Prairie Provident. It trades about 0.1 of its potential returns per unit of risk. Prairie Provident Resources is currently generating about 0.02 per unit of risk. If you would invest 1,170 in Amazon CDR on October 9, 2024 and sell it today you would earn a total of 1,535 from holding Amazon CDR or generate 131.2% 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. Prairie Provident Resources
Performance |
| Timeline |
| Amazon CDR |
| Prairie Provident |
Amazon CDR and Prairie Provident Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Prairie Provident
The main advantage of trading using opposite Amazon CDR and Prairie Provident positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Prairie Provident 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 Prairie Provident will offset losses from the drop in Prairie Provident's long position.| Amazon CDR vs. Reliq Health Technologies | Amazon CDR vs. Bausch Health Companies | Amazon CDR vs. CVS HEALTH CDR | Amazon CDR vs. Leveljump Healthcare Corp |
| Prairie Provident vs. Pine Cliff Energy | Prairie Provident vs. InPlay Oil Corp | Prairie Provident vs. Journey 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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