Correlation Between Amg River and Mid Cap

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

Diversification Opportunities for Amg River and Mid Cap

0.97

Correlation Coefficient

Amg River  Mid Cap

Almost no diversification

The 3 months correlation between Amg and Mid is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and Mid Cap Value Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Value has no effect on the direction of Amg River i.e., Amg River and Mid Cap go up and down completely randomly.

Pair Corralation between Amg River and Mid Cap

Assuming the 90 days horizon Amg River Road is expected to generate 0.93 times more return on investment than Mid Cap. However, Amg River Road is 1.07 times less risky than Mid Cap. It trades about -0.02 of its potential returns per unit of risk. Mid Cap Value Profund is currently generating about -0.03 per unit of risk. If you would invest  1,752  in Amg River Road on September 12, 2024 and sell it today you would lose (6.00) from holding Amg River Road or give up 0.34% 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.  Mid Cap Value Profund

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 basic indicators, Amg River showed solid returns over the last few months and may actually be approaching a breakup point.

Mid Cap Value

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Value Profund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mid Cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Amg River and Mid Cap

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

The idea behind Amg River Road and Mid Cap Value Profund 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 Channel module to use Commodity Channel Index to analyze current equity momentum.