Correlation Between Arts Way and AGCO
Can any of the company-specific risk be diversified away by investing in both Arts Way and AGCO 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 Arts Way and AGCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arts Way Manufacturing Co and AGCO Corporation, you can compare the effects of market volatilities on Arts Way and AGCO 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 Arts Way with a short position of AGCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arts Way and AGCO.
Diversification Opportunities for Arts Way and AGCO
Excellent diversification
The 3 months correlation between Arts and AGCO is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Arts Way Manufacturing Co and AGCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGCO and Arts Way 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 Arts Way Manufacturing Co are associated (or correlated) with AGCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGCO has no effect on the direction of Arts Way i.e., Arts Way and AGCO go up and down completely randomly.
Pair Corralation between Arts Way and AGCO
Given the investment horizon of 90 days Arts Way Manufacturing Co is expected to generate 47.26 times more return on investment than AGCO. However, Arts Way is 47.26 times more volatile than AGCO Corporation. It trades about 0.08 of its potential returns per unit of risk. AGCO Corporation is currently generating about -0.02 per unit of risk. If you would invest 178.00 in Arts Way Manufacturing Co on August 24, 2024 and sell it today you would lose (12.00) from holding Arts Way Manufacturing Co or give up 6.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arts Way Manufacturing Co vs. AGCO Corp.
Performance |
| Timeline |
| Arts Way Manufacturing |
| AGCO |
Arts Way and AGCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arts Way and AGCO
The main advantage of trading using opposite Arts Way and AGCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arts Way position performs unexpectedly, AGCO 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 AGCO will offset losses from the drop in AGCO's long position.| Arts Way vs. Small Cap Core | Arts Way vs. Morningstar Unconstrained Allocation | Arts Way vs. Mutual Of America | Arts Way vs. Ep Emerging Markets |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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