Correlation Between Amg River and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Amg River and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs Absolute, you can compare the effects of market volatilities on Amg River and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg River and Goldman Sachs.
Diversification Opportunities for Amg River and Goldman Sachs
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amg and Goldman is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and Goldman Sachs Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Absolute 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Absolute has no effect on the direction of Amg River i.e., Amg River and Goldman Sachs go up and down completely randomly.
Pair Corralation between Amg River and Goldman Sachs
Assuming the 90 days horizon Amg River Road is expected to generate 2.72 times more return on investment than Goldman Sachs. However, Amg River is 2.72 times more volatile than Goldman Sachs Absolute. It trades about 0.06 of its potential returns per unit of risk. Goldman Sachs Absolute is currently generating about 0.11 per unit of risk. If you would invest 1,324 in Amg River Road on September 12, 2024 and sell it today you would earn a total of 422.00 from holding Amg River Road or generate 31.87% 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. Goldman Sachs Absolute
Performance |
| Timeline |
| Amg River Road |
| Goldman Sachs Absolute |
Amg River and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amg River and Goldman Sachs
The main advantage of trading using opposite Amg River and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amg River position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Amg River vs. Vanguard Small Cap Value | Amg River vs. Vanguard Small Cap Value | Amg River vs. Us Small Cap | Amg River vs. Us Targeted Value |
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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 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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