Correlation Between Amg Managers and Amg Gwk

Can any of the company-specific risk be diversified away by investing in both Amg Managers and Amg Gwk 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 Managers and Amg Gwk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amg Managers Brandywine and Amg Gwk Small, you can compare the effects of market volatilities on Amg Managers and Amg Gwk 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 Managers with a short position of Amg Gwk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg Managers and Amg Gwk.

Diversification Opportunities for Amg Managers and Amg Gwk

0.92

Correlation Coefficient

Amg Managers  Amg Gwk

Almost no diversification

The 3 months correlation between Amg and Amg is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Amg Managers Brandywine and Amg Gwk Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Gwk Small and Amg Managers 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 Managers Brandywine are associated (or correlated) with Amg Gwk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Gwk Small has no effect on the direction of Amg Managers i.e., Amg Managers and Amg Gwk go up and down completely randomly.

Pair Corralation between Amg Managers and Amg Gwk

Assuming the 90 days horizon Amg Managers is expected to generate 1.28 times less return on investment than Amg Gwk. But when comparing it to its historical volatility, Amg Managers Brandywine is 1.33 times less risky than Amg Gwk. It trades about 0.03 of its potential returns per unit of risk. Amg Gwk Small is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,748  in Amg Gwk Small on December 4, 2024 and sell it today you would earn a total of  455.00  from holding Amg Gwk Small or generate 16.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Amg Managers Brandywine  vs.  Amg Gwk Small

Amg Managers Brandywine

Risk-Adjusted Performance

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.

Amg Gwk Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amg Gwk Small 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 Managers and Amg Gwk

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

The idea behind Amg Managers Brandywine and Amg Gwk Small 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.