Correlation Between Amg River and Edgar Lomax
Can any of the company-specific risk be diversified away by investing in both Amg River and Edgar Lomax 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 Edgar Lomax 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 Edgar Lomax Value, you can compare the effects of market volatilities on Amg River and Edgar Lomax 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 Edgar Lomax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg River and Edgar Lomax.
Diversification Opportunities for Amg River and Edgar Lomax
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amg and Edgar is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and Edgar Lomax Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgar Lomax Value 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 Edgar Lomax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgar Lomax Value has no effect on the direction of Amg River i.e., Amg River and Edgar Lomax go up and down completely randomly.
Pair Corralation between Amg River and Edgar Lomax
Assuming the 90 days horizon Amg River Road is expected to generate 1.02 times more return on investment than Edgar Lomax. However, Amg River is 1.02 times more volatile than Edgar Lomax Value. It trades about 0.43 of its potential returns per unit of risk. Edgar Lomax Value is currently generating about 0.27 per unit of risk. If you would invest 1,472 in Amg River Road on September 2, 2024 and sell it today you would earn a total of 116.00 from holding Amg River Road or generate 7.88% 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. Edgar Lomax Value
Performance |
| Timeline |
| Amg River Road |
| Edgar Lomax Value |
Amg River and Edgar Lomax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amg River and Edgar Lomax
The main advantage of trading using opposite Amg River and Edgar Lomax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amg River position performs unexpectedly, Edgar Lomax 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 Edgar Lomax will offset losses from the drop in Edgar Lomax's long position.| Amg River vs. Champlain Mid Cap | Amg River vs. Johcm Emerging Markets | Amg River vs. Walden Smid Cap | Amg River vs. American Beacon Stephens |
| Edgar Lomax vs. Nationwide Small Cap | Edgar Lomax vs. Nationwide International Index | Edgar Lomax vs. Nationwide Mid Cap | Edgar Lomax vs. Nationwide Sp 500 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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