Correlation Between Amazon and Rockdale Resources
Can any of the company-specific risk be diversified away by investing in both Amazon and Rockdale Resources 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 and Rockdale Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Rockdale Resources Corp, you can compare the effects of market volatilities on Amazon and Rockdale Resources 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 with a short position of Rockdale Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Rockdale Resources.
Diversification Opportunities for Amazon and Rockdale Resources
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and Rockdale is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Rockdale Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockdale Resources Corp and Amazon 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 Inc are associated (or correlated) with Rockdale Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockdale Resources Corp has no effect on the direction of Amazon i.e., Amazon and Rockdale Resources go up and down completely randomly.
Pair Corralation between Amazon and Rockdale Resources
Given the investment horizon of 90 days Amazon Inc is expected to generate 0.2 times more return on investment than Rockdale Resources. However, Amazon Inc is 5.09 times less risky than Rockdale Resources. It trades about 0.07 of its potential returns per unit of risk. Rockdale Resources Corp is currently generating about -0.1 per unit of risk. If you would invest 17,834 in Amazon Inc on September 1, 2024 and sell it today you would earn a total of 2,955 from holding Amazon Inc or generate 16.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 78.57% |
| Values | Daily Returns |
Amazon Inc vs. Rockdale Resources Corp
Performance |
| Timeline |
| Amazon Inc |
| Rockdale Resources Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amazon and Rockdale Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Rockdale Resources
The main advantage of trading using opposite Amazon and Rockdale Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Rockdale Resources 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 Rockdale Resources will offset losses from the drop in Rockdale Resources' long position.The idea behind Amazon Inc and Rockdale Resources Corp 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.| Rockdale Resources vs. AER Energy Resources | Rockdale Resources vs. Altura Energy | Rockdale Resources vs. Alamo Energy Corp | Rockdale Resources vs. Arete Industries |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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