Correlation Between Dotdigital Group and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both Dotdigital Group and AMG Advanced 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 Dotdigital Group and AMG Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dotdigital Group Plc and AMG Advanced Metallurgical, you can compare the effects of market volatilities on Dotdigital Group and AMG Advanced 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 Dotdigital Group with a short position of AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dotdigital Group and AMG Advanced.
Diversification Opportunities for Dotdigital Group and AMG Advanced
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dotdigital and AMG is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dotdigital Group Plc and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu and Dotdigital Group 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 Dotdigital Group Plc are associated (or correlated) with AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of Dotdigital Group i.e., Dotdigital Group and AMG Advanced go up and down completely randomly.
Pair Corralation between Dotdigital Group and AMG Advanced
Assuming the 90 days trading horizon Dotdigital Group Plc is expected to generate 1.04 times more return on investment than AMG Advanced. However, Dotdigital Group is 1.04 times more volatile than AMG Advanced Metallurgical. It trades about 0.0 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about -0.04 per unit of risk. If you would invest 8,970 in Dotdigital Group Plc on September 15, 2024 and sell it today you would lose (240.00) from holding Dotdigital Group Plc or give up 2.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
Dotdigital Group Plc vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| Dotdigital Group Plc |
| AMG Advanced Metallu |
Dotdigital Group and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dotdigital Group and AMG Advanced
The main advantage of trading using opposite Dotdigital Group and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dotdigital Group position performs unexpectedly, AMG Advanced 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 Advanced will offset losses from the drop in AMG Advanced's long position.| Dotdigital Group vs. Herald Investment Trust | Dotdigital Group vs. Kinnevik Investment AB | Dotdigital Group vs. Monks Investment Trust | Dotdigital Group vs. Diversified Energy |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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