Correlation Between Amg River and Amg Fq
Can any of the company-specific risk be diversified away by investing in both Amg River and Amg Fq 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 Amg Fq 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 Amg Fq Long Short, you can compare the effects of market volatilities on Amg River and Amg Fq 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 Amg Fq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg River and Amg Fq.
Diversification Opportunities for Amg River and Amg Fq
No risk reduction
The 3 months correlation between Amg and Amg is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and Amg Fq Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Fq Long 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 Amg Fq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Fq Long has no effect on the direction of Amg River i.e., Amg River and Amg Fq go up and down completely randomly.
Pair Corralation between Amg River and Amg Fq
Assuming the 90 days horizon Amg River Road is expected to generate 1.15 times more return on investment than Amg Fq. However, Amg River is 1.15 times more volatile than Amg Fq Long Short. It trades about 0.2 of its potential returns per unit of risk. Amg Fq Long Short is currently generating about 0.22 per unit of risk. If you would invest 1,454 in Amg River Road on August 31, 2024 and sell it today you would earn a total of 136.00 from holding Amg River Road or generate 9.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amg River Road vs. Amg Fq Long Short
Performance |
| Timeline |
| Amg River Road |
| Amg Fq Long |
Amg River and Amg Fq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amg River and Amg Fq
The main advantage of trading using opposite Amg River and Amg Fq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amg River position performs unexpectedly, Amg Fq 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 Fq will offset losses from the drop in Amg Fq's long position.The idea behind Amg River Road and Amg Fq Long Short pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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