Correlation Between AGF Management and Broadwind

Can any of the company-specific risk be diversified away by investing in both AGF Management and Broadwind 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 AGF Management and Broadwind into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AGF Management Limited and Broadwind, you can compare the effects of market volatilities on AGF Management and Broadwind 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 AGF Management with a short position of Broadwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Broadwind.

Diversification Opportunities for AGF Management and Broadwind

-0.57

Correlation Coefficient

AGF Management  Broadwind

Excellent diversification

The 3 months correlation between AGF and Broadwind is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Broadwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind and AGF Management 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 AGF Management Limited are associated (or correlated) with Broadwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind has no effect on the direction of AGF Management i.e., AGF Management and Broadwind go up and down completely randomly.

Pair Corralation between AGF Management and Broadwind

Assuming the 90 days horizon AGF Management Limited is expected to generate 0.43 times more return on investment than Broadwind. However, AGF Management Limited is 2.3 times less risky than Broadwind. It trades about 0.06 of its potential returns per unit of risk. Broadwind is currently generating about -0.01 per unit of risk. If you would invest  445.00  in AGF Management Limited on October 11, 2024 and sell it today you would earn a total of  260.00  from holding AGF Management Limited or generate 58.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AGF Management Limited  vs.  Broadwind

AGF Management

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AGF Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Broadwind

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Broadwind are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Broadwind reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AGF Management and Broadwind

The main advantage of trading using opposite AGF Management and Broadwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management position performs unexpectedly, Broadwind 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 Broadwind will offset losses from the drop in Broadwind's long position.

The idea behind AGF Management Limited and Broadwind pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.