Correlation Between American Hotel and Amazon CDR
Can any of the company-specific risk be diversified away by investing in both American Hotel 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 American Hotel and Amazon CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Hotel Income and Amazon CDR, you can compare the effects of market volatilities on American Hotel 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 American Hotel with a short position of Amazon CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Hotel and Amazon CDR.
Diversification Opportunities for American Hotel and Amazon CDR
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Amazon is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding American Hotel Income and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR and American Hotel 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 American Hotel Income 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 American Hotel i.e., American Hotel and Amazon CDR go up and down completely randomly.
Pair Corralation between American Hotel and Amazon CDR
Assuming the 90 days trading horizon American Hotel Income is expected to under-perform the Amazon CDR. In addition to that, American Hotel is 1.48 times more volatile than Amazon CDR. It trades about -0.44 of its total potential returns per unit of risk. Amazon CDR is currently generating about 0.23 per unit of volatility. If you would invest 2,466 in Amazon CDR on September 12, 2024 and sell it today you would earn a total of 214.00 from holding Amazon CDR or generate 8.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Hotel Income vs. Amazon CDR
Performance |
| Timeline |
| American Hotel Income |
| Amazon CDR |
American Hotel and Amazon CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Hotel and Amazon CDR
The main advantage of trading using opposite American Hotel and Amazon CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Hotel 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.| American Hotel vs. InterRent Real Estate | American Hotel vs. Canadian Apartment Properties | American Hotel vs. Granite Real Estate | American Hotel vs. Crombie Real Estate |
| Amazon CDR vs. Data Communications Management | Amazon CDR vs. Marimaca Copper Corp | Amazon CDR vs. Rogers Communications | Amazon CDR vs. Maple Leaf 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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