Correlation Between UPS CDR and Amazon CDR
Can any of the company-specific risk be diversified away by investing in both UPS CDR 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 UPS CDR and Amazon CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UPS CDR and Amazon CDR, you can compare the effects of market volatilities on UPS CDR 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 UPS CDR with a short position of Amazon CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPS CDR and Amazon CDR.
Diversification Opportunities for UPS CDR and Amazon CDR
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UPS and Amazon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding UPS CDR and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR and UPS CDR 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 UPS 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 UPS CDR i.e., UPS CDR and Amazon CDR go up and down completely randomly.
Pair Corralation between UPS CDR and Amazon CDR
Assuming the 90 days trading horizon UPS CDR is expected to under-perform the Amazon CDR. But the stock apears to be less risky and, when comparing its historical volatility, UPS CDR is 1.45 times less risky than Amazon CDR. The stock trades about -0.31 of its potential returns per unit of risk. The Amazon CDR is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 2,306 in Amazon CDR on January 19, 2025 and sell it today you would lose (265.00) from holding Amazon CDR or give up 11.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UPS CDR vs. Amazon CDR
Performance |
| Timeline |
| UPS CDR |
| Amazon CDR |
UPS CDR and Amazon CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPS CDR and Amazon CDR
The main advantage of trading using opposite UPS CDR and Amazon CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPS CDR 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.| UPS CDR vs. Diamond Estates Wines | UPS CDR vs. Maple Leaf Foods | UPS CDR vs. Constellation Software | UPS CDR vs. High Liner Foods |
| Amazon CDR vs. Titanium Transportation Group | Amazon CDR vs. Western Investment | Amazon CDR vs. Information Services | Amazon CDR vs. Canadian General Investments |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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