Correlation Between Amg Timessquare and Amg Southernsun
Can any of the company-specific risk be diversified away by investing in both Amg Timessquare and Amg Southernsun 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 Amg Timessquare and Amg Southernsun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amg Timessquare Small and Amg Southernsun Equity, you can compare the effects of market volatilities on Amg Timessquare and Amg Southernsun 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 Amg Timessquare with a short position of Amg Southernsun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg Timessquare and Amg Southernsun.
Diversification Opportunities for Amg Timessquare and Amg Southernsun
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amg and Amg is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Amg Timessquare Small and Amg Southernsun Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Southernsun Equity and Amg Timessquare 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 Amg Timessquare Small are associated (or correlated) with Amg Southernsun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Southernsun Equity has no effect on the direction of Amg Timessquare i.e., Amg Timessquare and Amg Southernsun go up and down completely randomly.
Pair Corralation between Amg Timessquare and Amg Southernsun
Assuming the 90 days horizon Amg Timessquare Small is expected to generate 1.06 times more return on investment than Amg Southernsun. However, Amg Timessquare is 1.06 times more volatile than Amg Southernsun Equity. It trades about 0.22 of its potential returns per unit of risk. Amg Southernsun Equity is currently generating about 0.19 per unit of risk. If you would invest 1,218 in Amg Timessquare Small on October 21, 2024 and sell it today you would earn a total of 44.00 from holding Amg Timessquare Small or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amg Timessquare Small vs. Amg Southernsun Equity
Performance |
| Timeline |
| Amg Timessquare Small |
| Amg Southernsun Equity |
Amg Timessquare and Amg Southernsun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amg Timessquare and Amg Southernsun
The main advantage of trading using opposite Amg Timessquare and Amg Southernsun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amg Timessquare position performs unexpectedly, Amg Southernsun 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 Southernsun will offset losses from the drop in Amg Southernsun's long position.| Amg Timessquare vs. Amg Southernsun Equity | Amg Timessquare vs. Amg Southernsun Equity | Amg Timessquare vs. Amg Fq Long Short | Amg Timessquare vs. Amg Southernsun Small |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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