Correlation Between Amg River and Aamg Funds
Can any of the company-specific risk be diversified away by investing in both Amg River and Aamg Funds 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 River and Aamg Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amg River Road and Aamg Funds Iv, you can compare the effects of market volatilities on Amg River and Aamg Funds 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 River with a short position of Aamg Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg River and Aamg Funds.
Diversification Opportunities for Amg River and Aamg Funds
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amg and Aamg is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and Aamg Funds Iv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aamg Funds Iv and Amg River 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 River Road are associated (or correlated) with Aamg Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aamg Funds Iv has no effect on the direction of Amg River i.e., Amg River and Aamg Funds go up and down completely randomly.
Pair Corralation between Amg River and Aamg Funds
Assuming the 90 days horizon Amg River is expected to generate 1.69 times less return on investment than Aamg Funds. But when comparing it to its historical volatility, Amg River Road is 2.16 times less risky than Aamg Funds. It trades about 0.31 of its potential returns per unit of risk. Aamg Funds Iv is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,818 in Aamg Funds Iv on August 31, 2024 and sell it today you would earn a total of 142.00 from holding Aamg Funds Iv or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amg River Road vs. Aamg Funds Iv
Performance |
| Timeline |
| Amg River Road |
| Aamg Funds Iv |
Amg River and Aamg Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amg River and Aamg Funds
The main advantage of trading using opposite Amg River and Aamg Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amg River position performs unexpectedly, Aamg Funds 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 Aamg Funds will offset losses from the drop in Aamg Funds' long position.| Amg River vs. Gamco Global Telecommunications | Amg River vs. The National Tax Free | Amg River vs. California High Yield Municipal | Amg River vs. Ab Impact Municipal |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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