Correlation Between Poplar Forest and Amg Gwk
Can any of the company-specific risk be diversified away by investing in both Poplar Forest 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 Poplar Forest and Amg Gwk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Poplar Forest Partners and Amg Gwk Small, you can compare the effects of market volatilities on Poplar Forest 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 Poplar Forest with a short position of Amg Gwk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poplar Forest and Amg Gwk.
Diversification Opportunities for Poplar Forest and Amg Gwk
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Poplar and AMG is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Poplar Forest Partners 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 Poplar Forest 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 Poplar Forest Partners 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 Poplar Forest i.e., Poplar Forest and Amg Gwk go up and down completely randomly.
Pair Corralation between Poplar Forest and Amg Gwk
Assuming the 90 days horizon Poplar Forest is expected to generate 5.64 times less return on investment than Amg Gwk. But when comparing it to its historical volatility, Poplar Forest Partners is 1.84 times less risky than Amg Gwk. It trades about 0.08 of its potential returns per unit of risk. Amg Gwk Small is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,222 in Amg Gwk Small on August 24, 2024 and sell it today you would earn a total of 303.00 from holding Amg Gwk Small or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Poplar Forest Partners vs. Amg Gwk Small
Performance |
| Timeline |
| Poplar Forest Partners |
| Amg Gwk Small |
Poplar Forest and Amg Gwk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Poplar Forest and Amg Gwk
The main advantage of trading using opposite Poplar Forest and Amg Gwk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Poplar Forest 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.| Poplar Forest vs. Poplar Forest Partners | Poplar Forest vs. Amg Gwk Small | Poplar Forest vs. Columbia Select Large Cap | Poplar Forest vs. T Rowe Price |
| Amg Gwk vs. Amg Gwk Small | Amg Gwk vs. Aberdeen Small Cap | Amg Gwk vs. Poplar Forest Partners | Amg Gwk vs. Calvert Small 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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