Correlation Between AMS Small and Amundi Physical
Can any of the company-specific risk be diversified away by investing in both AMS Small and Amundi Physical 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 AMS Small and Amundi Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMS Small Cap and Amundi Physical Gold, you can compare the effects of market volatilities on AMS Small and Amundi Physical 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 AMS Small with a short position of Amundi Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMS Small and Amundi Physical.
Diversification Opportunities for AMS Small and Amundi Physical
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AMS and Amundi is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding AMS Small Cap and Amundi Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Physical Gold and AMS Small 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 AMS Small Cap are associated (or correlated) with Amundi Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Physical Gold has no effect on the direction of AMS Small i.e., AMS Small and Amundi Physical go up and down completely randomly.
Pair Corralation between AMS Small and Amundi Physical
Assuming the 90 days trading horizon AMS Small Cap is expected to generate 1.31 times more return on investment than Amundi Physical. However, AMS Small is 1.31 times more volatile than Amundi Physical Gold. It trades about 0.14 of its potential returns per unit of risk. Amundi Physical Gold is currently generating about 0.18 per unit of risk. If you would invest 120,564 in AMS Small Cap on September 12, 2024 and sell it today you would earn a total of 4,577 from holding AMS Small Cap or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMS Small Cap vs. Amundi Physical Gold
Performance |
| Timeline |
AMS Small and Amundi Physical Volatility Contrast
Predicted Return Density |
| Returns |
AMS Small Cap
Pair trading matchups for AMS Small
Amundi Physical Gold
Pair trading matchups for Amundi Physical
Pair Trading with AMS Small and Amundi Physical
The main advantage of trading using opposite AMS Small and Amundi Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMS Small position performs unexpectedly, Amundi Physical 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 Amundi Physical will offset losses from the drop in Amundi Physical's long position.The idea behind AMS Small Cap and Amundi Physical Gold 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.| Amundi Physical vs. Amundi Index Solutions | Amundi Physical vs. Amundi MSCI World | Amundi Physical vs. Amundi Index Solutions | Amundi Physical vs. LG Russell 2000 |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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