Correlation Between Amg River and New Perspective
Can any of the company-specific risk be diversified away by investing in both Amg River and New Perspective 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 New Perspective 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 New Perspective Fund, you can compare the effects of market volatilities on Amg River and New Perspective 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 New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg River and New Perspective.
Diversification Opportunities for Amg River and New Perspective
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amg and New is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective 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 New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Amg River i.e., Amg River and New Perspective go up and down completely randomly.
Pair Corralation between Amg River and New Perspective
Assuming the 90 days horizon Amg River is expected to generate 5.62 times less return on investment than New Perspective. In addition to that, Amg River is 1.17 times more volatile than New Perspective Fund. It trades about 0.04 of its total potential returns per unit of risk. New Perspective Fund is currently generating about 0.23 per unit of volatility. If you would invest 6,388 in New Perspective Fund on September 13, 2024 and sell it today you would earn a total of 181.00 from holding New Perspective Fund or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amg River Road vs. New Perspective Fund
Performance |
| Timeline |
| Amg River Road |
| New Perspective |
Amg River and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amg River and New Perspective
The main advantage of trading using opposite Amg River and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amg River position performs unexpectedly, New Perspective 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 New Perspective will offset losses from the drop in New Perspective's long position.| Amg River vs. Amg River Road | Amg River vs. Champlain Small Pany | Amg River vs. Amg River Road | Amg River vs. Marsico Global Fund |
| New Perspective vs. Income Fund Of | New Perspective vs. New World Fund | New Perspective vs. American Mutual Fund | New Perspective vs. American Mutual Fund |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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