Correlation Between Biotechnology Fund and Amg River
Can any of the company-specific risk be diversified away by investing in both Biotechnology Fund 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 Biotechnology Fund and Amg River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biotechnology Fund Class and Amg River Road, you can compare the effects of market volatilities on Biotechnology Fund 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 Biotechnology Fund with a short position of Amg River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biotechnology Fund and Amg River.
Diversification Opportunities for Biotechnology Fund and Amg River
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Biotechnology and Amg is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Biotechnology Fund Class 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 Biotechnology Fund 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 Biotechnology Fund Class 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 Biotechnology Fund i.e., Biotechnology Fund and Amg River go up and down completely randomly.
Pair Corralation between Biotechnology Fund and Amg River
Assuming the 90 days horizon Biotechnology Fund Class is expected to under-perform the Amg River. In addition to that, Biotechnology Fund is 1.19 times more volatile than Amg River Road. It trades about -0.02 of its total potential returns per unit of risk. Amg River Road is currently generating about 0.22 per unit of volatility. If you would invest 964.00 in Amg River Road on September 12, 2024 and sell it today you would earn a total of 131.00 from holding Amg River Road or generate 13.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Biotechnology Fund Class vs. Amg River Road
Performance |
| Timeline |
| Biotechnology Fund Class |
| Amg River Road |
Biotechnology Fund and Amg River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biotechnology Fund and Amg River
The main advantage of trading using opposite Biotechnology Fund and Amg River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biotechnology Fund 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.| Biotechnology Fund vs. Amg River Road | Biotechnology Fund vs. William Blair Small | Biotechnology Fund vs. Royce Opportunity Fund | Biotechnology Fund vs. Boston Partners Small |
| Amg River vs. Amg River Road | Amg River vs. Champlain Small Pany | Amg River vs. Amg River Road | Amg River vs. Marsico Global Fund |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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