Correlation Between Masco Corp and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both Masco Corp and AMG Advanced 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 Masco Corp and AMG Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Masco Corp and AMG Advanced Metallurgical, you can compare the effects of market volatilities on Masco Corp and AMG Advanced 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 Masco Corp with a short position of AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masco Corp and AMG Advanced.
Diversification Opportunities for Masco Corp and AMG Advanced
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Masco and AMG is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Masco Corp and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu and Masco Corp 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 Masco Corp are associated (or correlated) with AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of Masco Corp i.e., Masco Corp and AMG Advanced go up and down completely randomly.
Pair Corralation between Masco Corp and AMG Advanced
Assuming the 90 days trading horizon Masco Corp is expected to generate 0.67 times more return on investment than AMG Advanced. However, Masco Corp is 1.5 times less risky than AMG Advanced. It trades about -0.07 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about -0.07 per unit of risk. If you would invest 8,133 in Masco Corp on September 12, 2024 and sell it today you would lose (214.00) from holding Masco Corp or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Masco Corp vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| Masco Corp |
| AMG Advanced Metallu |
Masco Corp and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masco Corp and AMG Advanced
The main advantage of trading using opposite Masco Corp and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masco Corp position performs unexpectedly, AMG Advanced 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 AMG Advanced will offset losses from the drop in AMG Advanced's long position.| Masco Corp vs. Komercni Banka | Masco Corp vs. Ally Financial | Masco Corp vs. Take Two Interactive Software | Masco Corp vs. MT Bank Corp |
| AMG Advanced vs. Neometals | AMG Advanced vs. Bisichi Mining PLC | AMG Advanced vs. Playtech Plc | AMG Advanced vs. Metals Exploration Plc |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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