Correlation Between AMG Advanced and American Homes
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and American Homes 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 AMG Advanced and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMG Advanced Metallurgical and American Homes 4, you can compare the effects of market volatilities on AMG Advanced and American Homes 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 AMG Advanced with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and American Homes.
Diversification Opportunities for AMG Advanced and American Homes
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between AMG and American is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and AMG Advanced 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 AMG Advanced Metallurgical are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of AMG Advanced i.e., AMG Advanced and American Homes go up and down completely randomly.
Pair Corralation between AMG Advanced and American Homes
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the American Homes. In addition to that, AMG Advanced is 1.97 times more volatile than American Homes 4. It trades about -0.08 of its total potential returns per unit of risk. American Homes 4 is currently generating about 0.03 per unit of volatility. If you would invest 3,512 in American Homes 4 on September 3, 2024 and sell it today you would earn a total of 347.00 from holding American Homes 4 or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.53% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. American Homes 4
Performance |
| Timeline |
| AMG Advanced Metallu |
| American Homes 4 |
AMG Advanced and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and American Homes
The main advantage of trading using opposite AMG Advanced and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| AMG Advanced vs. Catalyst Media Group | AMG Advanced vs. CATLIN GROUP | AMG Advanced vs. RTW Venture Fund | AMG Advanced vs. Secure Property Development |
| American Homes vs. AfriTin Mining | American Homes vs. Caledonia Mining | American Homes vs. SilverCrest Metals | American Homes vs. CleanTech Lithium 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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