Correlation Between AMG Advanced and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both AMG Advanced and Spirent Communications 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 Spirent Communications 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 Spirent Communications plc, you can compare the effects of market volatilities on AMG Advanced and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Spirent Communications.
Diversification Opportunities for AMG Advanced and Spirent Communications
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between AMG and Spirent is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of AMG Advanced i.e., AMG Advanced and Spirent Communications go up and down completely randomly.
Pair Corralation between AMG Advanced and Spirent Communications
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to under-perform the Spirent Communications. But the stock apears to be less risky and, when comparing its historical volatility, AMG Advanced Metallurgical is 1.55 times less risky than Spirent Communications. The stock trades about -0.08 of its potential returns per unit of risk. The Spirent Communications plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 17,157 in Spirent Communications plc on August 31, 2024 and sell it today you would lose (7.00) from holding Spirent Communications plc or give up 0.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. Spirent Communications plc
Performance |
| Timeline |
| AMG Advanced Metallu |
| Spirent Communications |
AMG Advanced and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and Spirent Communications
The main advantage of trading using opposite AMG Advanced and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| AMG Advanced vs. Neometals | AMG Advanced vs. Coor Service Management | AMG Advanced vs. Aeorema Communications Plc | AMG Advanced vs. JLEN Environmental Assets |
| Spirent Communications vs. CVR Energy | Spirent Communications vs. Viridian Therapeutics | Spirent Communications vs. Nationwide Building Society | Spirent Communications vs. News Corp Cl |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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