Correlation Between Ariel International and Amg River
Can any of the company-specific risk be diversified away by investing in both Ariel International 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 Ariel International and Amg River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ariel International Fund and Amg River Road, you can compare the effects of market volatilities on Ariel International 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 Ariel International with a short position of Amg River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ariel International and Amg River.
Diversification Opportunities for Ariel International and Amg River
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ariel and Amg is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ariel International Fund 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 Ariel International 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 Ariel International Fund 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 Ariel International i.e., Ariel International and Amg River go up and down completely randomly.
Pair Corralation between Ariel International and Amg River
Assuming the 90 days horizon Ariel International is expected to generate 5.69 times less return on investment than Amg River. But when comparing it to its historical volatility, Ariel International Fund is 1.02 times less risky than Amg River. It trades about 0.02 of its potential returns per unit of risk. Amg River Road is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,145 in Amg River Road on August 30, 2024 and sell it today you would earn a total of 443.00 from holding Amg River Road or generate 38.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ariel International Fund vs. Amg River Road
Performance |
| Timeline |
| Ariel International |
| Amg River Road |
Ariel International and Amg River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ariel International and Amg River
The main advantage of trading using opposite Ariel International and Amg River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ariel International 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.| Ariel International vs. Ariel Global Fund | Ariel International vs. Ariel Focus Fund | Ariel International vs. Alger Spectra Fund | Ariel International vs. Ariel International Fund |
| Amg River vs. Champlain Mid Cap | Amg River vs. Johcm Emerging Markets | Amg River vs. Walden Smid Cap | Amg River vs. American Beacon Stephens |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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