Correlation Between Amazon CDR and Dividend

Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Dividend 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 Amazon CDR and Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amazon CDR and Dividend 15 Split, you can compare the effects of market volatilities on Amazon CDR and Dividend 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 Amazon CDR with a short position of Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Dividend.

Diversification Opportunities for Amazon CDR and Dividend

0.5

Correlation Coefficient

Amazon CDR  Dividend

Very weak diversification

The 3 months correlation between Amazon and Dividend is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Dividend 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend 15 Split and Amazon 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 Amazon CDR are associated (or correlated) with Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend 15 Split has no effect on the direction of Amazon CDR i.e., Amazon CDR and Dividend go up and down completely randomly.

Pair Corralation between Amazon CDR and Dividend

Assuming the 90 days trading horizon Amazon CDR is expected to generate 1.27 times less return on investment than Dividend. But when comparing it to its historical volatility, Amazon CDR is 1.23 times less risky than Dividend. It trades about 0.08 of its potential returns per unit of risk. Dividend 15 Split is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  373.00  in Dividend 15 Split on October 4, 2024 and sell it today you would earn a total of  248.00  from holding Dividend 15 Split or generate 66.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Amazon CDR  vs.  Dividend 15 Split

Amazon CDR

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon CDR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Amazon CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dividend 15 Split

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dividend 15 Split are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dividend may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Amazon CDR and Dividend

The main advantage of trading using opposite Amazon CDR and Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Dividend 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 Dividend will offset losses from the drop in Dividend's long position.

The idea behind Amazon CDR and Dividend 15 Split pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.