Correlation Between Pear Tree and Amg River
Can any of the company-specific risk be diversified away by investing in both Pear Tree 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 Pear Tree and Amg River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pear Tree Polaris and Amg River Road, you can compare the effects of market volatilities on Pear Tree 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 Pear Tree with a short position of Amg River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pear Tree and Amg River.
Diversification Opportunities for Pear Tree and Amg River
Excellent diversification
The 3 months correlation between Pear and Amg is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pear Tree Polaris 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 Pear Tree 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 Pear Tree Polaris 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 Pear Tree i.e., Pear Tree and Amg River go up and down completely randomly.
Pair Corralation between Pear Tree and Amg River
Assuming the 90 days horizon Pear Tree Polaris is expected to under-perform the Amg River. In addition to that, Pear Tree is 1.09 times more volatile than Amg River Road. It trades about -0.11 of its total potential returns per unit of risk. Amg River Road is currently generating about 0.29 per unit of volatility. If you would invest 1,086 in Amg River Road on August 27, 2024 and sell it today you would earn a total of 47.00 from holding Amg River Road or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pear Tree Polaris vs. Amg River Road
Performance |
| Timeline |
| Pear Tree Polaris |
| Amg River Road |
Pear Tree and Amg River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pear Tree and Amg River
The main advantage of trading using opposite Pear Tree and Amg River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pear Tree 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.| Pear Tree vs. Loomis Sayles Growth | Pear Tree vs. Edgewood Growth Fund | Pear Tree vs. Nuance Mid Cap | Pear Tree vs. Parnassus Mid Cap |
| Amg River vs. Amg Southernsun Equity | Amg River vs. Amg Southernsun Equity | Amg River vs. Amg Fq Long Short | Amg River vs. Amg Southernsun Small |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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