Correlation Between Amg River and Aberdeen Ultra

Can any of the company-specific risk be diversified away by investing in both Amg River and Aberdeen Ultra 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 Ultra 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 Ultra Short, you can compare the effects of market volatilities on Amg River and Aberdeen Ultra 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 Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg River and Aberdeen Ultra.

Diversification Opportunities for Amg River and Aberdeen Ultra

0.82

Correlation Coefficient

Amg River  Aberdeen Ultra

Very poor diversification

The 3 months correlation between Amg and Aberdeen is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and Aberdeen Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Ultra Short 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 Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Ultra Short has no effect on the direction of Amg River i.e., Amg River and Aberdeen Ultra go up and down completely randomly.

Pair Corralation between Amg River and Aberdeen Ultra

Assuming the 90 days horizon Amg River Road is expected to generate 16.32 times more return on investment than Aberdeen Ultra. However, Amg River is 16.32 times more volatile than Aberdeen Ultra Short. It trades about 0.23 of its potential returns per unit of risk. Aberdeen Ultra Short is currently generating about 0.16 per unit of risk. If you would invest  976.00  in Amg River Road on September 2, 2024 and sell it today you would earn a total of  145.00  from holding Amg River Road or generate 14.86% return on investment over 90 days.

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

Amg River Road  vs.  Aberdeen Ultra Short

Amg River Road

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amg River Road are ranked lower than 18 (%) 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 Ultra Short

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Ultra Short are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Aberdeen Ultra 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 Ultra

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

The idea behind Amg River Road and Aberdeen Ultra Short 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..