Correlation Between Amazon and DCNG
Can any of the company-specific risk be diversified away by investing in both Amazon and DCNG 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 DCNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and DCNG, you can compare the effects of market volatilities on Amazon and DCNG 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 DCNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and DCNG.
Diversification Opportunities for Amazon and DCNG
Pay attention - limited upside
The 3 months correlation between Amazon and DCNG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and DCNG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCNG 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 DCNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCNG has no effect on the direction of Amazon i.e., Amazon and DCNG go up and down completely randomly.
Pair Corralation between Amazon and DCNG
If you would invest 13,221 in Amazon Inc on January 24, 2024 and sell it today you would earn a total of 4,733 from holding Amazon Inc or generate 35.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Amazon Inc vs. DCNG
Performance |
| Timeline |
| Amazon Inc |
| DCNG |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Amazon and DCNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and DCNG
The main advantage of trading using opposite Amazon and DCNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, DCNG 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 DCNG will offset losses from the drop in DCNG's long position.The idea behind Amazon Inc and DCNG 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.| DCNG vs. enCore Energy Corp | DCNG vs. iShares Core SP | DCNG vs. Vanguard Financials Index | DCNG vs. Roundhill Bitcoin Covered |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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