Correlation Between ANT and Royce International

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

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

Diversification Opportunities for ANT and Royce International

0.27

Correlation Coefficient

ANT  Royce International

Modest diversification

The 3 months correlation between ANT and Royce is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding ANT and Royce International Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce International and ANT 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 ANT are associated (or correlated) with Royce International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce International has no effect on the direction of ANT i.e., ANT and Royce International go up and down completely randomly.

Pair Corralation between ANT and Royce International

Assuming the 90 days trading horizon ANT is expected to generate 22.36 times more return on investment than Royce International. However, ANT is 22.36 times more volatile than Royce International Small Cap. It trades about 0.11 of its potential returns per unit of risk. Royce International Small Cap is currently generating about -0.21 per unit of risk. If you would invest  130.00  in ANT on October 11, 2024 and sell it today you would earn a total of  17.00  from holding ANT or generate 13.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.91%
Values	Daily Returns

ANT  vs.  Royce International Small Cap

ANT

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ANT are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, ANT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Royce International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royce International Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with ANT and Royce International

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

The idea behind ANT and Royce International Small Cap 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.