Correlation Between Amg River and Nationwide Bny

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

Diversification Opportunities for Amg River and Nationwide Bny

0.96

Correlation Coefficient

Amg River  Nationwide Bny

Almost no diversification

The 3 months correlation between Amg and Nationwide is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and Nationwide Bny Mellon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Bny Mellon 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 Nationwide Bny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Bny Mellon has no effect on the direction of Amg River i.e., Amg River and Nationwide Bny go up and down completely randomly.

Pair Corralation between Amg River and Nationwide Bny

Assuming the 90 days horizon Amg River Road is expected to generate 0.72 times more return on investment than Nationwide Bny. However, Amg River Road is 1.4 times less risky than Nationwide Bny. It trades about -0.19 of its potential returns per unit of risk. Nationwide Bny Mellon is currently generating about -0.14 per unit of risk. If you would invest  1,117  in Amg River Road on December 1, 2024 and sell it today you would lose (162.00) from holding Amg River Road or give up 14.5% of portfolio value over 90 days.

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

Amg River Road  vs.  Nationwide Bny Mellon

Amg River Road

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amg River Road has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's primary indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Nationwide Bny Mellon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nationwide Bny Mellon has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Amg River and Nationwide Bny

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

The idea behind Amg River Road and Nationwide Bny Mellon 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.