Correlation Between Ep Emerging and Amg Gwk

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

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

Diversification Opportunities for Ep Emerging and Amg Gwk

-0.57

Correlation Coefficient

Ep Emerging  Amg Gwk

Excellent diversification

The 3 months correlation between EPASX and Amg is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ep Emerging Markets and Amg Gwk Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Gwk Smallmid and Ep Emerging 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 Ep Emerging Markets 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 Smallmid has no effect on the direction of Ep Emerging i.e., Ep Emerging and Amg Gwk go up and down completely randomly.

Pair Corralation between Ep Emerging and Amg Gwk

Assuming the 90 days horizon Ep Emerging is expected to generate 4.41 times less return on investment than Amg Gwk. But when comparing it to its historical volatility, Ep Emerging Markets is 1.4 times less risky than Amg Gwk. It trades about 0.02 of its potential returns per unit of risk. Amg Gwk Smallmid is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,537  in Amg Gwk Smallmid on September 28, 2024 and sell it today you would earn a total of  391.00  from holding Amg Gwk Smallmid or generate 25.44% return on investment over 90 days.

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

Ep Emerging Markets  vs.  Amg Gwk Smallmid

Ep Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ep Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Smallmid

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Gwk Smallmid are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Amg Gwk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ep Emerging and Amg Gwk

The main advantage of trading using opposite Ep Emerging and Amg Gwk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ep Emerging 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 Ep Emerging Markets and Amg Gwk Smallmid 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.