Correlation Between Amazon and DKIDIO
Can any of the company-specific risk be diversified away by investing in both Amazon and DKIDIO 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 DKIDIO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Investeringsforeningen Danske Invest, you can compare the effects of market volatilities on Amazon and DKIDIO 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 DKIDIO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and DKIDIO.
Diversification Opportunities for Amazon and DKIDIO
Pay attention - limited upside
The 3 months correlation between Amazon and DKIDIO is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Investeringsforeningen Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investeringsforeningen 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 DKIDIO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investeringsforeningen has no effect on the direction of Amazon i.e., Amazon and DKIDIO go up and down completely randomly.
Pair Corralation between Amazon and DKIDIO
Given the investment horizon of 90 days Amazon Inc is expected to generate 3.66 times more return on investment than DKIDIO. However, Amazon is 3.66 times more volatile than Investeringsforeningen Danske Invest. It trades about 0.03 of its potential returns per unit of risk. Investeringsforeningen Danske Invest is currently generating about -0.04 per unit of risk. If you would invest 17,473 in Amazon Inc on January 25, 2024 and sell it today you would earn a total of 262.00 from holding Amazon Inc or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Amazon Inc vs. Investeringsforeningen Danske
Performance |
| Timeline |
| Amazon Inc |
| Investeringsforeningen |
Amazon and DKIDIO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and DKIDIO
The main advantage of trading using opposite Amazon and DKIDIO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, DKIDIO 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 DKIDIO will offset losses from the drop in DKIDIO's long position.The idea behind Amazon Inc and Investeringsforeningen Danske Invest 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.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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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