Correlation Between Amazon CDR and 5N Plus
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and 5N Plus 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 5N Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and 5N Plus, you can compare the effects of market volatilities on Amazon CDR and 5N Plus 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 5N Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and 5N Plus.
Diversification Opportunities for Amazon CDR and 5N Plus
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and VNP is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and 5N Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 5N Plus 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 5N Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 5N Plus has no effect on the direction of Amazon CDR i.e., Amazon CDR and 5N Plus go up and down completely randomly.
Pair Corralation between Amazon CDR and 5N Plus
Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.92 times more return on investment than 5N Plus. However, Amazon CDR is 1.09 times less risky than 5N Plus. It trades about 0.15 of its potential returns per unit of risk. 5N Plus is currently generating about -0.02 per unit of risk. If you would invest 2,105 in Amazon CDR on September 2, 2024 and sell it today you would earn a total of 372.00 from holding Amazon CDR or generate 17.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon CDR vs. 5N Plus
Performance |
| Timeline |
| Amazon CDR |
| 5N Plus |
Amazon CDR and 5N Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon CDR and 5N Plus
The main advantage of trading using opposite Amazon CDR and 5N Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, 5N Plus 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 5N Plus will offset losses from the drop in 5N Plus' long position.| Amazon CDR vs. iShares Canadian HYBrid | Amazon CDR vs. Altagas Cum Red | Amazon CDR vs. European Residential Real | Amazon CDR vs. iShares Fundamental Hedged |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |