Correlation Between AMG Advanced and North Atlantic
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and North Atlantic 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 North Atlantic 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 North Atlantic Smaller, you can compare the effects of market volatilities on AMG Advanced and North Atlantic 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 North Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and North Atlantic.
Diversification Opportunities for AMG Advanced and North Atlantic
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AMG and North is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and North Atlantic Smaller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Atlantic Smaller 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 North Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Atlantic Smaller has no effect on the direction of AMG Advanced i.e., AMG Advanced and North Atlantic go up and down completely randomly.
Pair Corralation between AMG Advanced and North Atlantic
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the North Atlantic. In addition to that, AMG Advanced is 1.26 times more volatile than North Atlantic Smaller. It trades about -0.17 of its total potential returns per unit of risk. North Atlantic Smaller is currently generating about -0.05 per unit of volatility. If you would invest 385,000 in North Atlantic Smaller on September 26, 2024 and sell it today you would lose (8,000) from holding North Atlantic Smaller or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. North Atlantic Smaller
Performance |
| Timeline |
| AMG Advanced Metallu |
| North Atlantic Smaller |
AMG Advanced and North Atlantic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and North Atlantic
The main advantage of trading using opposite AMG Advanced and North Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, North Atlantic 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 North Atlantic will offset losses from the drop in North Atlantic's long position.| AMG Advanced vs. Raytheon Technologies Corp | AMG Advanced vs. Allianz Technology Trust | AMG Advanced vs. PureTech Health plc | AMG Advanced vs. Accsys Technologies PLC |
| North Atlantic vs. Anglesey Mining | North Atlantic vs. Metals Exploration Plc | North Atlantic vs. AMG Advanced Metallurgical | North Atlantic vs. Fulcrum Metals 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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