Correlation Between Amazon and CI Gold

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

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

Diversification Opportunities for Amazon and CI Gold

0.27

Correlation Coefficient

Amazon  CI Gold

Modest diversification

The 3 months correlation between Amazon and CGXF is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and CI Gold Giants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Gold Giants and Amazon 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 Inc are associated (or correlated) with CI Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Gold Giants has no effect on the direction of Amazon i.e., Amazon and CI Gold go up and down completely randomly.

Pair Corralation between Amazon and CI Gold

Given the investment horizon of 90 days Amazon is expected to generate 7.82 times less return on investment than CI Gold. In addition to that, Amazon is 1.06 times more volatile than CI Gold Giants. It trades about 0.02 of its total potential returns per unit of risk. CI Gold Giants is currently generating about 0.13 per unit of volatility. If you would invest  1,056  in CI Gold Giants on December 1, 2024 and sell it today you would earn a total of  129.00  from holding CI Gold Giants or generate 12.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Amazon Inc  vs.  CI Gold Giants

Amazon Inc

Risk-Adjusted Performance

Weak

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

CI Gold Giants

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Gold Giants are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amazon and CI Gold

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

The idea behind Amazon Inc and CI Gold Giants 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.