Correlation Between Amg River and Palmer Square
Can any of the company-specific risk be diversified away by investing in both Amg River and Palmer Square 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 Palmer Square 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 Palmer Square Ultra Short, you can compare the effects of market volatilities on Amg River and Palmer Square 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 Palmer Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg River and Palmer Square.
Diversification Opportunities for Amg River and Palmer Square
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amg and Palmer is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and Palmer Square Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palmer Square Ultra 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 Palmer Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palmer Square Ultra has no effect on the direction of Amg River i.e., Amg River and Palmer Square go up and down completely randomly.
Pair Corralation between Amg River and Palmer Square
Assuming the 90 days horizon Amg River Road is expected to under-perform the Palmer Square. In addition to that, Amg River is 48.3 times more volatile than Palmer Square Ultra Short. It trades about -0.11 of its total potential returns per unit of risk. Palmer Square Ultra Short is currently generating about 0.67 per unit of volatility. If you would invest 1,977 in Palmer Square Ultra Short on November 15, 2024 and sell it today you would earn a total of 22.00 from holding Palmer Square Ultra Short or generate 1.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Amg River Road vs. Palmer Square Ultra Short
Performance |
Timeline |
Amg River Road |
Palmer Square Ultra |
Amg River and Palmer Square Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amg River and Palmer Square
The main advantage of trading using opposite Amg River and Palmer Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amg River position performs unexpectedly, Palmer Square 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 Palmer Square will offset losses from the drop in Palmer Square's long position.Amg River vs. Amg River Road | ||
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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