Correlation Between Amazon and Cooper Tire
Can any of the company-specific risk be diversified away by investing in both Amazon and Cooper Tire 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 Cooper Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Cooper Tire Rubber, you can compare the effects of market volatilities on Amazon and Cooper Tire 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 Cooper Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Cooper Tire.
Diversification Opportunities for Amazon and Cooper Tire
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and Cooper is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Cooper Tire Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Tire Rubber 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 Cooper Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Tire Rubber has no effect on the direction of Amazon i.e., Amazon and Cooper Tire go up and down completely randomly.
Pair Corralation between Amazon and Cooper Tire
If you would invest 20,891 in Amazon Inc on September 13, 2024 and sell it today you would earn a total of 2,135 from holding Amazon Inc or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Amazon Inc vs. Cooper Tire Rubber
Performance |
| Timeline |
| Amazon Inc |
| Cooper Tire Rubber |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amazon and Cooper Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Cooper Tire
The main advantage of trading using opposite Amazon and Cooper Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Cooper Tire 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 Cooper Tire will offset losses from the drop in Cooper Tire's long position.The idea behind Amazon Inc and Cooper Tire Rubber 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.| Cooper Tire vs. FitLife Brands, Common | Cooper Tire vs. ServiceNow | Cooper Tire vs. Sapiens International | Cooper Tire vs. Bridgford Foods |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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