Correlation Between Smallcap Growth and Amg Managers
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth 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 Smallcap Growth and Amg Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Amg Managers Fairpointe, you can compare the effects of market volatilities on Smallcap Growth 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 Smallcap Growth with a short position of Amg Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Amg Managers.
Diversification Opportunities for Smallcap Growth and Amg Managers
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Smallcap and Amg is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth 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 Smallcap Growth 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 Smallcap Growth 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 Smallcap Growth i.e., Smallcap Growth and Amg Managers go up and down completely randomly.
Pair Corralation between Smallcap Growth and Amg Managers
Assuming the 90 days horizon Smallcap Growth is expected to generate 1.51 times less return on investment than Amg Managers. In addition to that, Smallcap Growth is 1.61 times more volatile than Amg Managers Fairpointe. It trades about 0.03 of its total potential returns per unit of risk. Amg Managers Fairpointe is currently generating about 0.07 per unit of volatility. If you would invest 2,543 in Amg Managers Fairpointe on September 13, 2024 and sell it today you would earn a total of 26.00 from holding Amg Managers Fairpointe or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Amg Managers Fairpointe
Performance |
| Timeline |
| Smallcap Growth |
| Amg Managers Fairpointe |
Smallcap Growth and Amg Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Amg Managers
The main advantage of trading using opposite Smallcap Growth and Amg Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth 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.| Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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