Correlation Between AGF American and Sustainable Innovation

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

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

Diversification Opportunities for AGF American and Sustainable Innovation

0.57

Correlation Coefficient

AGF American  Sustainable Innovation

Very weak diversification

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

Pair Corralation between AGF American and Sustainable Innovation

Assuming the 90 days trading horizon AGF American Growth is expected to generate 1.19 times more return on investment than Sustainable Innovation. However, AGF American is 1.19 times more volatile than Sustainable Innovation Health. It trades about 0.14 of its potential returns per unit of risk. Sustainable Innovation Health is currently generating about 0.13 per unit of risk. If you would invest  6,716  in AGF American Growth on October 11, 2024 and sell it today you would earn a total of  603.00  from holding AGF American Growth or generate 8.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

AGF American Growth  vs.  Sustainable Innovation Health

AGF American Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGF American Growth are ranked lower than 11 (%) 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.

Sustainable Innovation

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sustainable Innovation Health are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak technical indicators, Sustainable Innovation may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AGF American and Sustainable Innovation

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

The idea behind AGF American Growth and Sustainable Innovation Health 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.