Correlation Between Fortis Pref and Amazon CDR
Can any of the company-specific risk be diversified away by investing in both Fortis Pref 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 Fortis Pref and Amazon CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortis Pref M and Amazon CDR, you can compare the effects of market volatilities on Fortis Pref 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 Fortis Pref with a short position of Amazon CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortis Pref and Amazon CDR.
Diversification Opportunities for Fortis Pref and Amazon CDR
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fortis and Amazon is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fortis Pref M and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR and Fortis Pref 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 Fortis Pref M 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 Fortis Pref i.e., Fortis Pref and Amazon CDR go up and down completely randomly.
Pair Corralation between Fortis Pref and Amazon CDR
Assuming the 90 days trading horizon Fortis Pref is expected to generate 6.5 times less return on investment than Amazon CDR. But when comparing it to its historical volatility, Fortis Pref M is 3.17 times less risky than Amazon CDR. It trades about 0.08 of its potential returns per unit of risk. Amazon CDR is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,105 in Amazon CDR on November 2, 2024 and sell it today you would earn a total of 685.00 from holding Amazon CDR or generate 32.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.05% |
| Values | Daily Returns |
Fortis Pref M vs. Amazon CDR
Performance |
| Timeline |
| Fortis Pref M |
| Amazon CDR |
Fortis Pref and Amazon CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortis Pref and Amazon CDR
The main advantage of trading using opposite Fortis Pref and Amazon CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortis Pref 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.| Fortis Pref vs. NeXGold Mining Corp | Fortis Pref vs. Element Fleet Management | Fortis Pref vs. Cogeco Communications | Fortis Pref vs. Hemisphere Energy |
| Amazon CDR vs. Ramp Metals | Amazon CDR vs. Calian Technologies | Amazon CDR vs. Stampede Drilling | Amazon CDR vs. Doman Building Materials |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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