Correlation Between Amazon CDR and Westport Fuel
Can any of the company-specific risk be diversified away by investing in both Amazon CDR and Westport Fuel 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 Westport Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon CDR and Westport Fuel Systems, you can compare the effects of market volatilities on Amazon CDR and Westport Fuel 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 Westport Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon CDR and Westport Fuel.
Diversification Opportunities for Amazon CDR and Westport Fuel
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amazon and Westport is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Westport Fuel Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westport Fuel Systems 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 Westport Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westport Fuel Systems has no effect on the direction of Amazon CDR i.e., Amazon CDR and Westport Fuel go up and down completely randomly.
Pair Corralation between Amazon CDR and Westport Fuel
Assuming the 90 days trading horizon Amazon CDR is expected to generate 0.53 times more return on investment than Westport Fuel. However, Amazon CDR is 1.89 times less risky than Westport Fuel. It trades about 0.1 of its potential returns per unit of risk. Westport Fuel Systems is currently generating about -0.05 per unit of risk. If you would invest 1,808 in Amazon CDR on September 25, 2024 and sell it today you would earn a total of 870.00 from holding Amazon CDR or generate 48.12% 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. Westport Fuel Systems
Performance |
Timeline |
Amazon CDR |
Westport Fuel Systems |
Amazon CDR and Westport Fuel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amazon CDR and Westport Fuel
The main advantage of trading using opposite Amazon CDR and Westport Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon CDR position performs unexpectedly, Westport Fuel 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 Westport Fuel will offset losses from the drop in Westport Fuel's long position.Amazon CDR vs. Gatos Silver | Amazon CDR vs. Enduro Metals Corp | Amazon CDR vs. Precious Metals And | Amazon CDR vs. Altair Resources |
Westport Fuel vs. Amazon CDR | Westport Fuel vs. Apple Inc CDR | Westport Fuel vs. Alphabet Inc CDR | Westport Fuel vs. Walmart Inc CDR |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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