Correlation Between Amg River and Amg Managers

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

Diversification Opportunities for Amg River and Amg Managers

0.78

Correlation Coefficient

Amg River  Amg Managers

Poor diversification

The 3 months correlation between Amg and Amg is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and Amg Managers Brandywine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Brandywine 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 Amg Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Managers Brandywine has no effect on the direction of Amg River i.e., Amg River and Amg Managers go up and down completely randomly.

Pair Corralation between Amg River and Amg Managers

Assuming the 90 days horizon Amg River Road is expected to under-perform the Amg Managers. In addition to that, Amg River is 2.85 times more volatile than Amg Managers Brandywine. It trades about -0.02 of its total potential returns per unit of risk. Amg Managers Brandywine is currently generating about 0.06 per unit of volatility. If you would invest  3,336  in Amg Managers Brandywine on October 5, 2024 and sell it today you would earn a total of  517.00  from holding Amg Managers Brandywine or generate 15.5% return on investment over 90 days.

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

Amg River Road  vs.  Amg Managers Brandywine

Amg River Road

Risk-Adjusted Performance

0 of 100

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 fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Amg Managers Brandywine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg Managers Brandywine has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Amg Managers

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

The idea behind Amg River Road and Amg Managers Brandywine 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.