Correlation Between Small Cap and Amg River
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Amg River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value Series and Amg River Road, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Amg River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Amg River.
Diversification Opportunities for Small Cap and Amg River
Almost no diversification
The 3 months correlation between Small and Amg is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Series 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 Small 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 Small Cap Value Series 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 Small Cap i.e., Small Cap and Amg River go up and down completely randomly.
Pair Corralation between Small Cap and Amg River
Assuming the 90 days horizon Small Cap Value Series is expected to generate 1.27 times more return on investment than Amg River. However, Small Cap is 1.27 times more volatile than Amg River Road. It trades about 0.31 of its potential returns per unit of risk. Amg River Road is currently generating about 0.3 per unit of risk. If you would invest 1,687 in Small Cap Value Series on August 28, 2024 and sell it today you would earn a total of 193.00 from holding Small Cap Value Series or generate 11.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Small Cap Value Series vs. Amg River Road
Performance |
| Timeline |
| Small Cap Value |
| Amg River Road |
Small Cap and Amg River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Amg River
The main advantage of trading using opposite Small Cap and Amg River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Lord Abbett Trust | Small Cap vs. Lord Abbett Trust | Small Cap vs. Floating Rate Fund | Small Cap vs. Lord Abbett Inv |
| Amg River vs. Amg River Road | Amg River vs. Champlain Small Pany | Amg River vs. Amg River Road | Amg River vs. Marsico Global 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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