Correlation Between Amazon CDR and Sigma Lithium
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Sigma Lithium 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 Sigma Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Sigma Lithium Resources, you can compare the effects of market volatilities on Amazon CDR and Sigma Lithium 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 Sigma Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Sigma Lithium.
Diversification Opportunities for Amazon CDR and Sigma Lithium
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and Sigma is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Sigma Lithium Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigma Lithium Resources 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 Sigma Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigma Lithium Resources has no effect on the direction of Amazon CDR i.e., Amazon CDR and Sigma Lithium go up and down completely randomly.
Pair Corralation between Amazon CDR and Sigma Lithium
Assuming the 90 days trading horizon Amazon CDR is expected to under-perform the Sigma Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Amazon CDR is 1.79 times less risky than Sigma Lithium. The stock trades about -0.12 of its potential returns per unit of risk. The Sigma Lithium Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,590 in Sigma Lithium Resources on December 30, 2024 and sell it today you would earn a total of 57.00 from holding Sigma Lithium Resources or generate 3.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Amazon CDR vs. Sigma Lithium Resources
Performance |
Timeline |
Amazon CDR |
Sigma Lithium Resources |
Amazon CDR and Sigma Lithium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amazon CDR and Sigma Lithium
The main advantage of trading using opposite Amazon CDR and Sigma Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Sigma Lithium 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 Sigma Lithium will offset losses from the drop in Sigma Lithium's long position.Amazon CDR vs. Precision Drilling | Amazon CDR vs. BluMetric Environmental | Amazon CDR vs. Titanium Transportation Group | Amazon CDR vs. Orbit Garant Drilling |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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