Correlation Between Amazon CDR and Wescan Goldfields

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Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Wescan Goldfields 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 Wescan Goldfields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Wescan Goldfields, you can compare the effects of market volatilities on Amazon CDR and Wescan Goldfields 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 Wescan Goldfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Wescan Goldfields.

Diversification Opportunities for Amazon CDR and Wescan Goldfields

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Amazon and Wescan is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Wescan Goldfields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wescan Goldfields 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 Wescan Goldfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wescan Goldfields has no effect on the direction of Amazon CDR i.e., Amazon CDR and Wescan Goldfields go up and down completely randomly.

Pair Corralation between Amazon CDR and Wescan Goldfields

Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.16 times more return on investment than Wescan Goldfields. However, Amazon CDR is 6.16 times less risky than Wescan Goldfields. It trades about 0.09 of its potential returns per unit of risk. Wescan Goldfields is currently generating about 0.01 per unit of risk. If you would invest  1,781  in Amazon CDR on September 3, 2024 and sell it today you would earn a total of  696.00  from holding Amazon CDR or generate 39.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Amazon CDR  vs.  Wescan Goldfields

 Performance 
       Timeline  
Amazon CDR 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Amazon CDR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Amazon CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.
Wescan Goldfields 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wescan Goldfields has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Amazon CDR and Wescan Goldfields Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon CDR and Wescan Goldfields

The main advantage of trading using opposite Amazon CDR and Wescan Goldfields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Wescan Goldfields 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 Wescan Goldfields will offset losses from the drop in Wescan Goldfields' long position.
The idea behind Amazon CDR and Wescan Goldfields pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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