Correlation Between Common Stock and Amg Managers
Can any of the company-specific risk be diversified away by investing in both Common Stock 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 Common Stock and Amg Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Common Stock Fund and Amg Managers Fairpointe, you can compare the effects of market volatilities on Common Stock 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 Common Stock with a short position of Amg Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Common Stock and Amg Managers.
Diversification Opportunities for Common Stock and Amg Managers
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Common and Amg is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Common Stock Fund and Amg Managers Fairpointe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Fairpointe and Common Stock 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 Common Stock Fund 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 Fairpointe has no effect on the direction of Common Stock i.e., Common Stock and Amg Managers go up and down completely randomly.
Pair Corralation between Common Stock and Amg Managers
Assuming the 90 days horizon Common Stock Fund is expected to generate 1.41 times more return on investment than Amg Managers. However, Common Stock is 1.41 times more volatile than Amg Managers Fairpointe. It trades about 0.13 of its potential returns per unit of risk. Amg Managers Fairpointe is currently generating about 0.17 per unit of risk. If you would invest 3,809 in Common Stock Fund on August 24, 2024 and sell it today you would earn a total of 137.00 from holding Common Stock Fund or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Common Stock Fund vs. Amg Managers Fairpointe
Performance |
| Timeline |
| Common Stock |
| Amg Managers Fairpointe |
Common Stock and Amg Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Common Stock and Amg Managers
The main advantage of trading using opposite Common Stock and Amg Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Common Stock 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.| Common Stock vs. Fam Equity Income Fund | Common Stock vs. Meridian Growth Fund | Common Stock vs. Muhlenkamp Fund Institutional | Common Stock vs. Royce Pennsylvania Mutual |
| Amg Managers vs. Amg Yacktman Focused | Amg Managers vs. Heartland Value Plus | Amg Managers vs. Common Stock Fund | Amg Managers vs. Perkins Mid Cap |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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