Correlation Between Ab Discovery and Amg River
Can any of the company-specific risk be diversified away by investing in both Ab Discovery and Amg River 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 Ab Discovery and Amg River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Discovery Value and Amg River Road, you can compare the effects of market volatilities on Ab Discovery and Amg River 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 Ab Discovery with a short position of Amg River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Discovery and Amg River.
Diversification Opportunities for Ab Discovery and Amg River
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ABYSX and AMG is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Ab Discovery Value and Amg River Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg River Road and Ab Discovery 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 Ab Discovery Value are associated (or correlated) with Amg River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg River Road has no effect on the direction of Ab Discovery i.e., Ab Discovery and Amg River go up and down completely randomly.
Pair Corralation between Ab Discovery and Amg River
Assuming the 90 days horizon Ab Discovery Value is expected to generate 1.19 times more return on investment than Amg River. However, Ab Discovery is 1.19 times more volatile than Amg River Road. It trades about 0.05 of its potential returns per unit of risk. Amg River Road is currently generating about 0.05 per unit of risk. If you would invest 2,063 in Ab Discovery Value on September 3, 2024 and sell it today you would earn a total of 573.00 from holding Ab Discovery Value or generate 27.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Discovery Value vs. Amg River Road
Performance |
| Timeline |
| Ab Discovery Value |
| Amg River Road |
Ab Discovery and Amg River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Discovery and Amg River
The main advantage of trading using opposite Ab Discovery and Amg River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Discovery position performs unexpectedly, Amg River 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 Amg River will offset losses from the drop in Amg River's long position.| Ab Discovery vs. Vanguard Small Cap Value | Ab Discovery vs. Vanguard Small Cap Value | Ab Discovery vs. Us Small Cap | Ab Discovery vs. Us Targeted Value |
| Amg River vs. Vanguard Small Cap Value | Amg River vs. Vanguard Small Cap Value | Amg River vs. Us Small Cap | Amg River vs. Us Targeted Value |
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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