Correlation Between Amg River and Us Targeted

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

Diversification Opportunities for Amg River and Us Targeted

0.93

Correlation Coefficient

Amg River  Us Targeted

Almost no diversification

The 3 months correlation between Amg and DFFVX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and Us Targeted Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Targeted Value 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 Us Targeted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Targeted Value has no effect on the direction of Amg River i.e., Amg River and Us Targeted go up and down completely randomly.

Pair Corralation between Amg River and Us Targeted

Assuming the 90 days horizon Amg River is expected to generate 3.24 times less return on investment than Us Targeted. But when comparing it to its historical volatility, Amg River Road is 1.13 times less risky than Us Targeted. It trades about 0.01 of its potential returns per unit of risk. Us Targeted Value is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,159  in Us Targeted Value on December 2, 2024 and sell it today you would earn a total of  224.00  from holding Us Targeted Value or generate 7.09% return on investment over 90 days.

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

Amg River Road  vs.  Us Targeted Value

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 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.

Us Targeted Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Us Targeted Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Amg River and Us Targeted

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

The idea behind Amg River Road and Us Targeted Value 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.