Correlation Between Amazon CDR and Theratechnologies
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Theratechnologies 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 Theratechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Theratechnologies, you can compare the effects of market volatilities on Amazon CDR and Theratechnologies 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 Theratechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Theratechnologies.
Diversification Opportunities for Amazon CDR and Theratechnologies
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amazon and Theratechnologies is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Theratechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theratechnologies 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 Theratechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theratechnologies has no effect on the direction of Amazon CDR i.e., Amazon CDR and Theratechnologies go up and down completely randomly.
Pair Corralation between Amazon CDR and Theratechnologies
Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.33 times more return on investment than Theratechnologies. However, Amazon CDR is 3.0 times less risky than Theratechnologies. It trades about 0.11 of its potential returns per unit of risk. Theratechnologies is currently generating about 0.0 per unit of risk. If you would invest 1,030 in Amazon CDR on September 12, 2024 and sell it today you would earn a total of 1,650 from holding Amazon CDR or generate 160.19% 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. Theratechnologies
Performance |
| Timeline |
| Amazon CDR |
| Theratechnologies |
Amazon CDR and Theratechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and Theratechnologies
The main advantage of trading using opposite Amazon CDR and Theratechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Theratechnologies 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 Theratechnologies will offset losses from the drop in Theratechnologies' long position.| Amazon CDR vs. Data Communications Management | Amazon CDR vs. Marimaca Copper Corp | Amazon CDR vs. Rogers Communications | Amazon CDR vs. Maple Leaf Foods |
| Theratechnologies vs. Premium Income | Theratechnologies vs. E L Financial Corp | Theratechnologies vs. Fairfax Financial Holdings | Theratechnologies vs. Fairfax Fin Hld |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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