Correlation Between Amazon CDR and Real Estate

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

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

Diversification Opportunities for Amazon CDR and Real Estate

-0.88

Correlation Coefficient

Amazon CDR  Real Estate

Pay attention - limited upside

The 3 months correlation between Amazon and Real is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Amazon CDR and Real Estate E Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate E 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 Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate E has no effect on the direction of Amazon CDR i.e., Amazon CDR and Real Estate go up and down completely randomly.

Pair Corralation between Amazon CDR and Real Estate

Assuming the 90 days trading horizon Amazon CDR is expected to generate 1.44 times more return on investment than Real Estate. However, Amazon CDR is 1.44 times more volatile than Real Estate E Commerce. It trades about 0.11 of its potential returns per unit of risk. Real Estate E Commerce is currently generating about 0.0 per unit of risk. If you would invest  1,066  in Amazon CDR on September 29, 2024 and sell it today you would earn a total of  1,596  from holding Amazon CDR or generate 149.72% return on investment over 90 days.

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

Amazon CDR  vs.  Real Estate E Commerce

Amazon CDR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon CDR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Amazon CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Real Estate E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Estate E Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Amazon CDR and Real Estate

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

The idea behind Amazon CDR and Real Estate E Commerce 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.