Correlation Between Amg Chicago and Amg Gwk
Can any of the company-specific risk be diversified away by investing in both Amg Chicago and Amg Gwk 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 Amg Chicago and Amg Gwk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amg Chicago Equity and Amg Gwk Small, you can compare the effects of market volatilities on Amg Chicago and Amg Gwk 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 Amg Chicago with a short position of Amg Gwk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg Chicago and Amg Gwk.
Diversification Opportunities for Amg Chicago and Amg Gwk
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amg and Amg is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Amg Chicago Equity and Amg Gwk Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Gwk Small and Amg Chicago 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 Amg Chicago Equity are associated (or correlated) with Amg Gwk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Gwk Small has no effect on the direction of Amg Chicago i.e., Amg Chicago and Amg Gwk go up and down completely randomly.
Pair Corralation between Amg Chicago and Amg Gwk
Assuming the 90 days horizon Amg Chicago Equity is expected to under-perform the Amg Gwk. But the mutual fund apears to be less risky and, when comparing its historical volatility, Amg Chicago Equity is 1.05 times less risky than Amg Gwk. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Amg Gwk Small is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,859 in Amg Gwk Small on September 3, 2024 and sell it today you would earn a total of 735.00 from holding Amg Gwk Small or generate 25.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.91% |
| Values | Daily Returns |
Amg Chicago Equity vs. Amg Gwk Small
Performance |
| Timeline |
| Amg Chicago Equity |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Amg Gwk Small |
Amg Chicago and Amg Gwk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amg Chicago and Amg Gwk
The main advantage of trading using opposite Amg Chicago and Amg Gwk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amg Chicago position performs unexpectedly, Amg Gwk 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 Gwk will offset losses from the drop in Amg Gwk's long position.The idea behind Amg Chicago Equity and Amg Gwk Small pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Amg Gwk vs. Vanguard Small Cap Index | Amg Gwk vs. Vanguard Small Cap Index | Amg Gwk vs. Vanguard Small Cap Index | Amg Gwk vs. Vanguard Small Cap Index |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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