Correlation Between Dow Jones and Amg Managers
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Amg Managers 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 Dow Jones and Amg Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Amg Managers Brandywine, you can compare the effects of market volatilities on Dow Jones and Amg Managers 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 Dow Jones with a short position of Amg Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Amg Managers.
Diversification Opportunities for Dow Jones and Amg Managers
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Amg is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Amg Managers Brandywine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Brandywine and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Amg Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Managers Brandywine has no effect on the direction of Dow Jones i.e., Dow Jones and Amg Managers go up and down completely randomly.
Pair Corralation between Dow Jones and Amg Managers
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.46 times more return on investment than Amg Managers. However, Dow Jones is 1.46 times more volatile than Amg Managers Brandywine. It trades about 0.1 of its potential returns per unit of risk. Amg Managers Brandywine is currently generating about 0.09 per unit of risk. If you would invest 3,730,602 in Dow Jones Industrial on September 12, 2024 and sell it today you would earn a total of 684,254 from holding Dow Jones Industrial or generate 18.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Amg Managers Brandywine
Performance |
| Timeline |
Dow Jones and Amg Managers Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Amg Managers Brandywine
Pair trading matchups for Amg Managers
Pair Trading with Dow Jones and Amg Managers
The main advantage of trading using opposite Dow Jones and Amg Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Amg Managers 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 Managers will offset losses from the drop in Amg Managers' long position.| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
| Amg Managers vs. Diamond Hill Long Short | Amg Managers vs. Pimco Rae Worldwide | Amg Managers vs. SCOR PK | Amg Managers vs. Morningstar Unconstrained Allocation |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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