Correlation Between Large Cap and Amg Southernsun
Can any of the company-specific risk be diversified away by investing in both Large Cap and Amg Southernsun 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 Large Cap and Amg Southernsun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap Fund and Amg Southernsun Small, you can compare the effects of market volatilities on Large Cap and Amg Southernsun 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 Large Cap with a short position of Amg Southernsun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Amg Southernsun.
Diversification Opportunities for Large Cap and Amg Southernsun
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Large and Amg is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Fund and Amg Southernsun Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Southernsun Small and Large Cap 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 Large Cap Fund are associated (or correlated) with Amg Southernsun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Southernsun Small has no effect on the direction of Large Cap i.e., Large Cap and Amg Southernsun go up and down completely randomly.
Pair Corralation between Large Cap and Amg Southernsun
Assuming the 90 days horizon Large Cap is expected to generate 1.46 times less return on investment than Amg Southernsun. But when comparing it to its historical volatility, Large Cap Fund is 1.74 times less risky than Amg Southernsun. It trades about 0.22 of its potential returns per unit of risk. Amg Southernsun Small is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,967 in Amg Southernsun Small on August 26, 2024 and sell it today you would earn a total of 163.00 from holding Amg Southernsun Small or generate 5.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap Fund vs. Amg Southernsun Small
Performance |
| Timeline |
| Large Cap Fund |
| Amg Southernsun Small |
Large Cap and Amg Southernsun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and Amg Southernsun
The main advantage of trading using opposite Large Cap and Amg Southernsun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap position performs unexpectedly, Amg Southernsun 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 Southernsun will offset losses from the drop in Amg Southernsun's long position.| Large Cap vs. Wasatch Large Cap | Large Cap vs. Loomis Sayles Bond | Large Cap vs. Harbor International Fund | Large Cap vs. Equity Series Class |
| Amg Southernsun vs. American Beacon Bridgeway | Amg Southernsun vs. John Hancock Disciplined | Amg Southernsun vs. Large Cap Fund | Amg Southernsun vs. Baird E Plus |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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