Correlation Between Microsoft Corp and Amazon CDR
Can any of the company-specific risk be diversified away by investing in both Microsoft Corp 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 Microsoft Corp and Amazon CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft Corp CDR and Amazon CDR, you can compare the effects of market volatilities on Microsoft Corp 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 Microsoft Corp with a short position of Amazon CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and Amazon CDR.
Diversification Opportunities for Microsoft Corp and Amazon CDR
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Amazon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp CDR and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR and Microsoft Corp 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 Microsoft Corp CDR 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 Microsoft Corp i.e., Microsoft Corp and Amazon CDR go up and down completely randomly.
Pair Corralation between Microsoft Corp and Amazon CDR
Assuming the 90 days trading horizon Microsoft Corp CDR is expected to under-perform the Amazon CDR. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft Corp CDR is 1.39 times less risky than Amazon CDR. The stock trades about -0.04 of its potential returns per unit of risk. The Amazon CDR is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,249 in Amazon CDR on August 28, 2024 and sell it today you would earn a total of 152.00 from holding Amazon CDR or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft Corp CDR vs. Amazon CDR
Performance |
| Timeline |
| Microsoft Corp CDR |
| Amazon CDR |
Microsoft Corp and Amazon CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft Corp and Amazon CDR
The main advantage of trading using opposite Microsoft Corp and Amazon CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp 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.| Microsoft Corp vs. Telus Corp | Microsoft Corp vs. Toronto Dominion Bank | Microsoft Corp vs. Manulife Financial Corp | Microsoft Corp vs. Canadian Natural Resources |
| Amazon CDR vs. NVIDIA CDR | Amazon CDR vs. Apple Inc CDR | Amazon CDR vs. Microsoft Corp CDR | Amazon CDR vs. Alphabet Inc CDR |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets |