Correlation Between Dana Large and Amg Managers

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

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

Diversification Opportunities for Dana Large and Amg Managers

0.73

Correlation Coefficient

Dana Large  Amg Managers

Poor diversification

The 3 months correlation between Dana and Amg is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and Amg Managers Centersquare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Centersquare and Dana Large 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 Dana Large Cap 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 Centersquare has no effect on the direction of Dana Large i.e., Dana Large and Amg Managers go up and down completely randomly.

Pair Corralation between Dana Large and Amg Managers

Assuming the 90 days horizon Dana Large is expected to generate 1.08 times less return on investment than Amg Managers. In addition to that, Dana Large is 1.11 times more volatile than Amg Managers Centersquare. It trades about 0.02 of its total potential returns per unit of risk. Amg Managers Centersquare is currently generating about 0.02 per unit of volatility. If you would invest  1,045  in Amg Managers Centersquare on October 22, 2024 and sell it today you would earn a total of  93.00  from holding Amg Managers Centersquare or generate 8.9% return on investment over 90 days.

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

Dana Large Cap  vs.  Amg Managers Centersquare

Dana Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dana Large Cap 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 forward 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 Centersquare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg Managers Centersquare has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Dana Large and Amg Managers

The main advantage of trading using opposite Dana Large and Amg Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana Large 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 Dana Large Cap and Amg Managers Centersquare 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.