Correlation Between National Tax and Amg Managers

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

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

Diversification Opportunities for National Tax and Amg Managers

0.0

Correlation Coefficient

National Tax  Amg Managers

Pay attention - limited upside

The 3 months correlation between National and Amg is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free 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 National Tax 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 The National Tax Free 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 National Tax i.e., National Tax and Amg Managers go up and down completely randomly.

Pair Corralation between National Tax and Amg Managers

Assuming the 90 days horizon The National Tax Free is expected to generate 0.17 times more return on investment than Amg Managers. However, The National Tax Free is 5.93 times less risky than Amg Managers. It trades about 0.11 of its potential returns per unit of risk. Amg Managers Brandywine is currently generating about -0.02 per unit of risk. If you would invest  1,836  in The National Tax Free on December 19, 2024 and sell it today you would earn a total of  20.00  from holding The National Tax Free or generate 1.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The National Tax Free  vs.  Amg Managers Brandywine

National Tax

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The National Tax Free are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, National Tax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 fairly strong forward indicators, Amg Managers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National Tax and Amg Managers

The main advantage of trading using opposite National Tax and Amg Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Tax 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 The National Tax Free 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.