Correlation Between Amazon CDR and Stingray
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Stingray 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 Stingray into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Stingray Group, you can compare the effects of market volatilities on Amazon CDR and Stingray 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 Stingray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Stingray.
Diversification Opportunities for Amazon CDR and Stingray
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amazon and Stingray is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Stingray Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stingray 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 Stingray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stingray Group has no effect on the direction of Amazon CDR i.e., Amazon CDR and Stingray go up and down completely randomly.
Pair Corralation between Amazon CDR and Stingray
Assuming the 90 days trading horizon Amazon CDR is expected to generate 1.8 times more return on investment than Stingray. However, Amazon CDR is 1.8 times more volatile than Stingray Group. It trades about 0.25 of its potential returns per unit of risk. Stingray Group is currently generating about -0.14 per unit of risk. If you would invest 2,493 in Amazon CDR on September 13, 2024 and sell it today you would earn a total of 252.00 from holding Amazon CDR or generate 10.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. Stingray Group
Performance |
| Timeline |
| Amazon CDR |
| Stingray Group |
Amazon CDR and Stingray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Stingray
The main advantage of trading using opposite Amazon CDR and Stingray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Stingray 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 Stingray will offset losses from the drop in Stingray's long position.| Amazon CDR vs. Firan Technology Group | Amazon CDR vs. Canadian Utilities Limited | Amazon CDR vs. Ocumetics Technology Corp | Amazon CDR vs. Advent Wireless |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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