Correlation Between Amazon CDR and Spartan Delta

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

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

Diversification Opportunities for Amazon CDR and Spartan Delta

0.69

Correlation Coefficient

Amazon CDR  Spartan Delta

Poor diversification

The 3 months correlation between Amazon and Spartan is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Spartan Delta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spartan Delta Corp 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 Spartan Delta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spartan Delta Corp has no effect on the direction of Amazon CDR i.e., Amazon CDR and Spartan Delta go up and down completely randomly.

Pair Corralation between Amazon CDR and Spartan Delta

Assuming the 90 days trading horizon Amazon CDR is expected to under-perform the Spartan Delta. But the stock apears to be less risky and, when comparing its historical volatility, Amazon CDR is 1.52 times less risky than Spartan Delta. The stock trades about -0.09 of its potential returns per unit of risk. The Spartan Delta Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  324.00  in Spartan Delta Corp on December 25, 2024 and sell it today you would earn a total of  15.00  from holding Spartan Delta Corp or generate 4.63% return on investment over 90 days.

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

Amazon CDR  vs.  Spartan Delta Corp

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 unsteady 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.

Spartan Delta Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Spartan Delta Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Spartan Delta may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Amazon CDR and Spartan Delta

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

The idea behind Amazon CDR and Spartan Delta Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.