Correlation Between Amg Managers and Amg Frontier

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

By analyzing existing cross correlation between Amg Managers Lmcg and Amg Frontier Small, you can compare the effects of market volatilities on Amg Managers and Amg Frontier 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 Managers with a short position of Amg Frontier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg Managers and Amg Frontier.

Diversification Opportunities for Amg Managers and Amg Frontier

0.78

Correlation Coefficient

Amg Managers  Amg Frontier

Poor diversification

The 3 months correlation between Amg and Amg is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Amg Managers Lmcg and Amg Frontier Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Frontier Small and Amg Managers 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 Managers Lmcg are associated (or correlated) with Amg Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Frontier Small has no effect on the direction of Amg Managers i.e., Amg Managers and Amg Frontier go up and down completely randomly.

Pair Corralation between Amg Managers and Amg Frontier

Assuming the 90 days horizon Amg Managers Lmcg is expected to generate 0.66 times more return on investment than Amg Frontier. However, Amg Managers Lmcg is 1.5 times less risky than Amg Frontier. It trades about 0.06 of its potential returns per unit of risk. Amg Frontier Small is currently generating about 0.03 per unit of risk. If you would invest  1,601  in Amg Managers Lmcg on October 9, 2024 and sell it today you would earn a total of  227.00  from holding Amg Managers Lmcg or generate 14.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Amg Managers Lmcg  vs.  Amg Frontier Small

Amg Managers Lmcg

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Managers Lmcg are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Amg Managers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amg Frontier Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg Frontier Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Amg Frontier is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amg Managers and Amg Frontier

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

The idea behind Amg Managers Lmcg and Amg Frontier Small 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.

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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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.