Correlation Between Metropolitan West and Ambrus Core
Can any of the company-specific risk be diversified away by investing in both Metropolitan West and Ambrus Core 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 Metropolitan West and Ambrus Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West Porate and Ambrus Core Bond, you can compare the effects of market volatilities on Metropolitan West and Ambrus Core 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 Metropolitan West with a short position of Ambrus Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Ambrus Core.
Diversification Opportunities for Metropolitan West and Ambrus Core
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metropolitan and Ambrus is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Porate and Ambrus Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambrus Core Bond and Metropolitan West 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 Metropolitan West Porate are associated (or correlated) with Ambrus Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambrus Core Bond has no effect on the direction of Metropolitan West i.e., Metropolitan West and Ambrus Core go up and down completely randomly.
Pair Corralation between Metropolitan West and Ambrus Core
Assuming the 90 days horizon Metropolitan West Porate is expected to generate 1.56 times more return on investment than Ambrus Core. However, Metropolitan West is 1.56 times more volatile than Ambrus Core Bond. It trades about 0.13 of its potential returns per unit of risk. Ambrus Core Bond is currently generating about 0.11 per unit of risk. If you would invest 856.00 in Metropolitan West Porate on October 12, 2024 and sell it today you would earn a total of 67.00 from holding Metropolitan West Porate or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West Porate vs. Ambrus Core Bond
Performance |
| Timeline |
| Metropolitan West Porate |
| Ambrus Core Bond |
Metropolitan West and Ambrus Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Ambrus Core
The main advantage of trading using opposite Metropolitan West and Ambrus Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Ambrus Core 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 Ambrus Core will offset losses from the drop in Ambrus Core's long position.| Metropolitan West vs. Touchstone Small Cap | Metropolitan West vs. Champlain Small | Metropolitan West vs. Sp Smallcap 600 | Metropolitan West vs. Kinetics Small Cap |
| Ambrus Core vs. Angel Oak Ultrashort | Ambrus Core vs. Transam Short Term Bond | Ambrus Core vs. Virtus Multi Sector Short | Ambrus Core vs. Chartwell Short Duration |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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