Correlation Between Amazon CDR and Sun Life
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Sun Life 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 Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Sun Life Financial, you can compare the effects of market volatilities on Amazon CDR and Sun Life 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 Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Sun Life.
Diversification Opportunities for Amazon CDR and Sun Life
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and Sun is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Amazon CDR i.e., Amazon CDR and Sun Life go up and down completely randomly.
Pair Corralation between Amazon CDR and Sun Life
Assuming the 90 days trading horizon Amazon CDR is expected to generate 1.79 times more return on investment than Sun Life. However, Amazon CDR is 1.79 times more volatile than Sun Life Financial. It trades about 0.09 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.04 per unit of risk. If you would invest 1,095 in Amazon CDR on August 30, 2024 and sell it today you would earn a total of 1,356 from holding Amazon CDR or generate 123.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. Sun Life Financial
Performance |
| Timeline |
| Amazon CDR |
| Sun Life Financial |
Amazon CDR and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Sun Life
The main advantage of trading using opposite Amazon CDR and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Sun Life 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 Sun Life will offset losses from the drop in Sun Life'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 |
| Sun Life vs. Walmart Inc CDR | Sun Life vs. Amazon CDR | Sun Life vs. Berkshire Hathaway CDR | Sun Life vs. UnitedHealth Group CDR |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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