Correlation Between Spirent Communications and AGF Management
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and AGF Management 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 Spirent Communications and AGF Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and AGF Management Limited, you can compare the effects of market volatilities on Spirent Communications and AGF Management 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 Spirent Communications with a short position of AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and AGF Management.
Diversification Opportunities for Spirent Communications and AGF Management
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Spirent and AGF is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Spirent Communications i.e., Spirent Communications and AGF Management go up and down completely randomly.
Pair Corralation between Spirent Communications and AGF Management
Assuming the 90 days horizon Spirent Communications is expected to generate 2.22 times less return on investment than AGF Management. But when comparing it to its historical volatility, Spirent Communications plc is 2.15 times less risky than AGF Management. It trades about 0.19 of its potential returns per unit of risk. AGF Management Limited is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 670.00 in AGF Management Limited on September 2, 2024 and sell it today you would earn a total of 60.00 from holding AGF Management Limited or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. AGF Management Limited
Performance |
| Timeline |
| Spirent Communications |
| AGF Management |
Spirent Communications and AGF Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and AGF Management
The main advantage of trading using opposite Spirent Communications and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, AGF Management 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 AGF Management will offset losses from the drop in AGF Management's long position.| Spirent Communications vs. Deutsche Telekom AG | Spirent Communications vs. Superior Plus Corp | Spirent Communications vs. NMI Holdings | Spirent Communications vs. Origin Agritech |
| AGF Management vs. Ameriprise Financial | AGF Management vs. Ares Management Corp | AGF Management vs. Superior Plus Corp | AGF Management vs. NMI Holdings |
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 Stocks Directory module to find actively traded stocks across global markets.
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