Correlation Between Now Corp and Amazonas Florestal
Can any of the company-specific risk be diversified away by investing in both Now Corp and Amazonas Florestal 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 Now Corp and Amazonas Florestal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Now Corp and Amazonas Florestal, you can compare the effects of market volatilities on Now Corp and Amazonas Florestal 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 Now Corp with a short position of Amazonas Florestal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Now Corp and Amazonas Florestal.
Diversification Opportunities for Now Corp and Amazonas Florestal
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Now and Amazonas is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Now Corp and Amazonas Florestal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazonas Florestal and Now 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 Now Corp are associated (or correlated) with Amazonas Florestal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazonas Florestal has no effect on the direction of Now Corp i.e., Now Corp and Amazonas Florestal go up and down completely randomly.
Pair Corralation between Now Corp and Amazonas Florestal
Given the investment horizon of 90 days Now Corp is expected to generate 1.42 times more return on investment than Amazonas Florestal. However, Now Corp is 1.42 times more volatile than Amazonas Florestal. It trades about 0.21 of its potential returns per unit of risk. Amazonas Florestal is currently generating about 0.15 per unit of risk. If you would invest 0.02 in Now Corp on August 30, 2024 and sell it today you would lose (0.01) from holding Now Corp or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Now Corp vs. Amazonas Florestal
Performance |
| Timeline |
| Now Corp |
| Amazonas Florestal |
Now Corp and Amazonas Florestal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Now Corp and Amazonas Florestal
The main advantage of trading using opposite Now Corp and Amazonas Florestal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Now Corp position performs unexpectedly, Amazonas Florestal 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 Amazonas Florestal will offset losses from the drop in Amazonas Florestal's long position.| Now Corp vs. Scepter Holdings | Now Corp vs. SponsorsOne | Now Corp vs. Vg Life Sciences | Now Corp vs. FDCTech |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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