Correlation Between Frost Total and Amg River
Can any of the company-specific risk be diversified away by investing in both Frost Total 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 Frost Total and Amg River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frost Total Return and Amg River Road, you can compare the effects of market volatilities on Frost Total 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 Frost Total with a short position of Amg River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frost Total and Amg River.
Diversification Opportunities for Frost Total and Amg River
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Frost and Amg is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Frost Total Return 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 Frost Total 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 Frost Total Return 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 Frost Total i.e., Frost Total and Amg River go up and down completely randomly.
Pair Corralation between Frost Total and Amg River
Assuming the 90 days horizon Frost Total Return is expected to generate 0.34 times more return on investment than Amg River. However, Frost Total Return is 2.97 times less risky than Amg River. It trades about 0.15 of its potential returns per unit of risk. Amg River Road is currently generating about 0.02 per unit of risk. If you would invest 977.00 in Frost Total Return on September 13, 2024 and sell it today you would earn a total of 7.00 from holding Frost Total Return or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frost Total Return vs. Amg River Road
Performance |
| Timeline |
| Frost Total Return |
| Amg River Road |
Frost Total and Amg River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frost Total and Amg River
The main advantage of trading using opposite Frost Total and Amg River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frost Total 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.| Frost Total vs. Baird Ultra Short | Frost Total vs. Frost Total Return | Frost Total vs. Frost Kempner Multi Cap | Frost Total vs. Frost Kempner Treasury |
| Amg River vs. Alger Smallcap Growth | Amg River vs. Deutsche Global Real | Amg River vs. Amg River Road | Amg River vs. Delaware Value Fund |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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