Correlation Between The National and Amg River
Can any of the company-specific risk be diversified away by investing in both The National and Amg River 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 The National and Amg River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The National Tax Free and Amg River Road, you can compare the effects of market volatilities on The National and Amg River 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 The National with a short position of Amg River. Check out your portfolio center. Please also check ongoing floating volatility patterns of The National and Amg River.
Diversification Opportunities for The National and Amg River
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between The and Amg is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Amg River Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg River Road and The National 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 The National Tax Free are associated (or correlated) with Amg River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg River Road has no effect on the direction of The National i.e., The National and Amg River go up and down completely randomly.
Pair Corralation between The National and Amg River
Assuming the 90 days horizon The National is expected to generate 6.22 times less return on investment than Amg River. But when comparing it to its historical volatility, The National Tax Free is 3.43 times less risky than Amg River. It trades about 0.05 of its potential returns per unit of risk. Amg River Road is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 887.00 in Amg River Road on August 31, 2024 and sell it today you would earn a total of 244.00 from holding Amg River Road or generate 27.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The National Tax Free vs. Amg River Road
Performance |
| Timeline |
| National Tax |
| Amg River Road |
The National and Amg River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The National and Amg River
The main advantage of trading using opposite The National and Amg River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The National position performs unexpectedly, Amg River 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 Amg River will offset losses from the drop in Amg River's long position.| The National vs. Vanguard Intermediate Term Tax Exempt | The National vs. Vanguard Intermediate Term Tax Exempt | The National vs. Tax Exempt Bond | The National vs. Tax Exempt Bond |
| Amg River vs. Gamco Global Telecommunications | Amg River vs. The National Tax Free | Amg River vs. California High Yield Municipal | Amg River vs. Ab Impact Municipal |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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