Correlation Between AMS Small and ISHS SP500
Can any of the company-specific risk be diversified away by investing in both AMS Small and ISHS SP500 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 ISHS SP500 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 ISHS SP500 USD, you can compare the effects of market volatilities on AMS Small and ISHS SP500 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 ISHS SP500. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMS Small and ISHS SP500.
Diversification Opportunities for AMS Small and ISHS SP500
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AMS and ISHS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AMS Small Cap and ISHS SP500 USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISHS SP500 USD 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 ISHS SP500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISHS SP500 USD has no effect on the direction of AMS Small i.e., AMS Small and ISHS SP500 go up and down completely randomly.
Pair Corralation between AMS Small and ISHS SP500
If you would invest (100.00) in ISHS SP500 USD on September 1, 2024 and sell it today you would earn a total of 100.00 from holding ISHS SP500 USD or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
AMS Small Cap vs. ISHS SP500 USD
Performance |
| Timeline |
AMS Small and ISHS SP500 Volatility Contrast
Predicted Return Density |
| Returns |
AMS Small Cap
Pair trading matchups for AMS Small
Pair Trading with AMS Small and ISHS SP500
The main advantage of trading using opposite AMS Small and ISHS SP500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMS Small position performs unexpectedly, ISHS SP500 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 ISHS SP500 will offset losses from the drop in ISHS SP500's long position.The idea behind AMS Small Cap and ISHS SP500 USD 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.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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