Correlation Between AMG Advanced and Ross Stores
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on AMG Advanced and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Ross Stores.
Diversification Opportunities for AMG Advanced and Ross Stores
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AMG and Ross is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of AMG Advanced i.e., AMG Advanced and Ross Stores go up and down completely randomly.
Pair Corralation between AMG Advanced and Ross Stores
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the Ross Stores. In addition to that, AMG Advanced is 1.26 times more volatile than Ross Stores. It trades about -0.23 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.26 per unit of volatility. If you would invest 13,859 in Ross Stores on September 20, 2024 and sell it today you would earn a total of 1,286 from holding Ross Stores or generate 9.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. Ross Stores
Performance |
| Timeline |
| AMG Advanced Metallu |
| Ross Stores |
AMG Advanced and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and Ross Stores
The main advantage of trading using opposite AMG Advanced and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| AMG Advanced vs. Samsung Electronics Co | AMG Advanced vs. Samsung Electronics Co | AMG Advanced vs. Hyundai Motor | AMG Advanced vs. Reliance Industries Ltd |
| Ross Stores vs. Samsung Electronics Co | Ross Stores vs. Samsung Electronics Co | Ross Stores vs. Hyundai Motor | Ross Stores vs. Reliance Industries Ltd |
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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