Correlation Between CDL INVESTMENT and Amazon

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

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

Diversification Opportunities for CDL INVESTMENT and Amazon

0.54

Correlation Coefficient

CDL INVESTMENT  Amazon

Very weak diversification

The 3 months correlation between CDL and Amazon is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CDL INVESTMENT and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and CDL INVESTMENT 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 CDL INVESTMENT are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of CDL INVESTMENT i.e., CDL INVESTMENT and Amazon go up and down completely randomly.

Pair Corralation between CDL INVESTMENT and Amazon

Assuming the 90 days trading horizon CDL INVESTMENT is expected to generate 3.42 times less return on investment than Amazon. In addition to that, CDL INVESTMENT is 1.2 times more volatile than Amazon Inc. It trades about 0.01 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.06 per unit of volatility. If you would invest  11,732  in Amazon Inc on March 20, 2025 and sell it today you would earn a total of  7,038  from holding Amazon Inc or generate 59.99% return on investment over 90 days.

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

CDL INVESTMENT  vs.  Amazon Inc

CDL INVESTMENT

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CDL INVESTMENT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CDL INVESTMENT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Amazon Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Amazon may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with CDL INVESTMENT and Amazon

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

The idea behind CDL INVESTMENT and Amazon Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..