Correlation Between Canadian Utilities and Amazon CDR
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and Amazon CDR 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 Canadian Utilities and Amazon CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Ltd and Amazon CDR, you can compare the effects of market volatilities on Canadian Utilities and Amazon CDR 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 Canadian Utilities with a short position of Amazon CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Amazon CDR.
Diversification Opportunities for Canadian Utilities and Amazon CDR
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Canadian and Amazon is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Ltd and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR and Canadian Utilities 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 Canadian Utilities Ltd are associated (or correlated) with Amazon CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon CDR has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Amazon CDR go up and down completely randomly.
Pair Corralation between Canadian Utilities and Amazon CDR
Assuming the 90 days trading horizon Canadian Utilities is expected to generate 2.53 times less return on investment than Amazon CDR. But when comparing it to its historical volatility, Canadian Utilities Ltd is 1.86 times less risky than Amazon CDR. It trades about 0.07 of its potential returns per unit of risk. Amazon CDR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,686 in Amazon CDR on September 1, 2024 and sell it today you would earn a total of 791.00 from holding Amazon CDR or generate 46.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Canadian Utilities Ltd vs. Amazon CDR
Performance |
| Timeline |
| Canadian Utilities |
| Amazon CDR |
Canadian Utilities and Amazon CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Amazon CDR
The main advantage of trading using opposite Canadian Utilities and Amazon CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, Amazon CDR 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 Amazon CDR will offset losses from the drop in Amazon CDR's long position.| Canadian Utilities vs. Altair Resources | Canadian Utilities vs. Arizona Metals Corp | Canadian Utilities vs. DRI Healthcare Trust | Canadian Utilities vs. Talon Metals Corp |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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