Correlation Between AMG Advanced and Howden Joinery
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Howden Joinery 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 Howden Joinery 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 Howden Joinery Group, you can compare the effects of market volatilities on AMG Advanced and Howden Joinery 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 Howden Joinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Howden Joinery.
Diversification Opportunities for AMG Advanced and Howden Joinery
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AMG and Howden is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Howden Joinery Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Howden Joinery Group 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 Howden Joinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Howden Joinery Group has no effect on the direction of AMG Advanced i.e., AMG Advanced and Howden Joinery go up and down completely randomly.
Pair Corralation between AMG Advanced and Howden Joinery
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to generate 1.18 times more return on investment than Howden Joinery. However, AMG Advanced is 1.18 times more volatile than Howden Joinery Group. It trades about 0.37 of its potential returns per unit of risk. Howden Joinery Group is currently generating about 0.0 per unit of risk. If you would invest 1,367 in AMG Advanced Metallurgical on October 23, 2024 and sell it today you would earn a total of 181.00 from holding AMG Advanced Metallurgical or generate 13.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. Howden Joinery Group
Performance |
| Timeline |
| AMG Advanced Metallu |
| Howden Joinery Group |
AMG Advanced and Howden Joinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and Howden Joinery
The main advantage of trading using opposite AMG Advanced and Howden Joinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, Howden Joinery 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 Howden Joinery will offset losses from the drop in Howden Joinery's long position.| AMG Advanced vs. URU Metals | AMG Advanced vs. Jacquet Metal Service | AMG Advanced vs. Rheinmetall AG | AMG Advanced vs. Blackrock World Mining |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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