Correlation Between Amg River and Aberdeen Tax

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

By analyzing existing cross correlation between Amg River Road and Aberdeen Tax Free Income, you can compare the effects of market volatilities on Amg River and Aberdeen Tax 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 River with a short position of Aberdeen Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg River and Aberdeen Tax.

Diversification Opportunities for Amg River and Aberdeen Tax

0.23

Correlation Coefficient

Amg River  Aberdeen Tax

Modest diversification

The 3 months correlation between Amg and Aberdeen is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and Aberdeen Tax Free Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Tax Free and Amg River 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 River Road are associated (or correlated) with Aberdeen Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Tax Free has no effect on the direction of Amg River i.e., Amg River and Aberdeen Tax go up and down completely randomly.

Pair Corralation between Amg River and Aberdeen Tax

Assuming the 90 days horizon Amg River Road is expected to generate 3.94 times more return on investment than Aberdeen Tax. However, Amg River is 3.94 times more volatile than Aberdeen Tax Free Income. It trades about 0.23 of its potential returns per unit of risk. Aberdeen Tax Free Income is currently generating about 0.03 per unit of risk. If you would invest  964.00  in Amg River Road on September 12, 2024 and sell it today you would earn a total of  135.00  from holding Amg River Road or generate 14.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Amg River Road  vs.  Aberdeen Tax Free Income

Amg River Road

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amg River Road are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Amg River showed solid returns over the last few months and may actually be approaching a breakup point.

Aberdeen Tax Free

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Tax Free Income are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aberdeen Tax 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 River and Aberdeen Tax

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

The idea behind Amg River Road and Aberdeen Tax Free Income 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 Commodity Directory module to find actively traded commodities issued by global exchanges.