Correlation Between Cardano and AGF American

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

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

Diversification Opportunities for Cardano and AGF American

0.73

Correlation Coefficient

Cardano  AGF American

Poor diversification

The 3 months correlation between Cardano and AGF is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and AGF American Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF American Growth and Cardano 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 Cardano are associated (or correlated) with AGF American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF American Growth has no effect on the direction of Cardano i.e., Cardano and AGF American go up and down completely randomly.

Pair Corralation between Cardano and AGF American

Assuming the 90 days trading horizon Cardano is expected to generate 5.71 times more return on investment than AGF American. However, Cardano is 5.71 times more volatile than AGF American Growth. It trades about 0.08 of its potential returns per unit of risk. AGF American Growth is currently generating about 0.19 per unit of risk. If you would invest  92.00  in Cardano on October 25, 2024 and sell it today you would earn a total of  6.00  from holding Cardano or generate 6.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Cardano  vs.  AGF American Growth

Cardano

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cardano exhibited solid returns over the last few months and may actually be approaching a breakup point.

AGF American Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGF American Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, AGF American may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cardano and AGF American

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

The idea behind Cardano and AGF American Growth 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.