Correlation Between AMS Small and IShareso Government
Can any of the company-specific risk be diversified away by investing in both AMS Small and IShareso Government 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 IShareso Government 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 iShareso Government Bond, you can compare the effects of market volatilities on AMS Small and IShareso Government 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 IShareso Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMS Small and IShareso Government.
Diversification Opportunities for AMS Small and IShareso Government
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AMS and IShareso is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding AMS Small Cap and iShareso Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShareso Government Bond 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 IShareso Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShareso Government Bond has no effect on the direction of AMS Small i.e., AMS Small and IShareso Government go up and down completely randomly.
Pair Corralation between AMS Small and IShareso Government
Assuming the 90 days trading horizon AMS Small Cap is expected to under-perform the IShareso Government. In addition to that, AMS Small is 3.78 times more volatile than iShareso Government Bond. It trades about -0.05 of its total potential returns per unit of risk. iShareso Government Bond is currently generating about 0.01 per unit of volatility. If you would invest 19,113 in iShareso Government Bond on August 30, 2024 and sell it today you would earn a total of 17.00 from holding iShareso Government Bond or generate 0.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMS Small Cap vs. iShareso Government Bond
Performance |
| Timeline |
AMS Small and IShareso Government Volatility Contrast
Predicted Return Density |
| Returns |
AMS Small Cap
Pair trading matchups for AMS Small
iShareso Government Bond
Pair trading matchups for IShareso Government
Pair Trading with AMS Small and IShareso Government
The main advantage of trading using opposite AMS Small and IShareso Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMS Small position performs unexpectedly, IShareso Government 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 IShareso Government will offset losses from the drop in IShareso Government's long position.| AMS Small vs. Vastned Retail NV | AMS Small vs. Reinet Investments SCA | AMS Small vs. BE Semiconductor Industries | AMS Small vs. SBM Offshore NV |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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