Correlation Between Amazon CDR and Dexterra

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

By analyzing existing cross correlation between Amazon CDR and Dexterra Group, you can compare the effects of market volatilities on Amazon CDR and Dexterra 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 Dexterra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Dexterra.

Diversification Opportunities for Amazon CDR and Dexterra

0.56

Correlation Coefficient

Amazon CDR  Dexterra

Very weak diversification

The 3 months correlation between Amazon and Dexterra is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Dexterra Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexterra Group 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 Dexterra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexterra Group has no effect on the direction of Amazon CDR i.e., Amazon CDR and Dexterra go up and down completely randomly.

Pair Corralation between Amazon CDR and Dexterra

Assuming the 90 days trading horizon Amazon CDR is expected to generate 1.88 times less return on investment than Dexterra. In addition to that, Amazon CDR is 1.19 times more volatile than Dexterra Group. It trades about 0.04 of its total potential returns per unit of risk. Dexterra Group is currently generating about 0.1 per unit of volatility. If you would invest  542.00  in Dexterra Group on December 5, 2024 and sell it today you would earn a total of  212.00  from holding Dexterra Group or generate 39.11% 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.  Dexterra Group

Amazon CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Dexterra Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dexterra Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Dexterra is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Amazon CDR and Dexterra

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

The idea behind Amazon CDR and Dexterra Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.