Correlation Between Westport Fuel and Amazon CDR
Can any of the company-specific risk be diversified away by investing in both Westport Fuel and Amazon CDR 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 Westport Fuel and Amazon CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westport Fuel Systems and Amazon CDR, you can compare the effects of market volatilities on Westport Fuel and Amazon CDR 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 Westport Fuel with a short position of Amazon CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westport Fuel and Amazon CDR.
Diversification Opportunities for Westport Fuel and Amazon CDR
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westport and Amazon is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Westport Fuel Systems and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR and Westport Fuel 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 Westport Fuel Systems are associated (or correlated) with Amazon CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon CDR has no effect on the direction of Westport Fuel i.e., Westport Fuel and Amazon CDR go up and down completely randomly.
Pair Corralation between Westport Fuel and Amazon CDR
Assuming the 90 days trading horizon Westport Fuel Systems is expected to under-perform the Amazon CDR. In addition to that, Westport Fuel is 1.12 times more volatile than Amazon CDR. It trades about -0.14 of its total potential returns per unit of risk. Amazon CDR is currently generating about 0.06 per unit of volatility. If you would invest 2,375 in Amazon CDR on September 25, 2024 and sell it today you would earn a total of 303.00 from holding Amazon CDR or generate 12.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Westport Fuel Systems vs. Amazon CDR
Performance |
Timeline |
Westport Fuel Systems |
Amazon CDR |
Westport Fuel and Amazon CDR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Westport Fuel and Amazon CDR
The main advantage of trading using opposite Westport Fuel and Amazon CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westport Fuel position performs unexpectedly, Amazon CDR 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 Amazon CDR will offset losses from the drop in Amazon CDR's long position.Westport Fuel vs. Amazon CDR | Westport Fuel vs. Apple Inc CDR | Westport Fuel vs. Alphabet Inc CDR | Westport Fuel vs. Walmart Inc CDR |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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