Correlation Between Amg Gwk and Balanced Strategy

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

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

Diversification Opportunities for Amg Gwk and Balanced Strategy

0.76

Correlation Coefficient

Amg Gwk  Balanced Strategy

Poor diversification

The 3 months correlation between Amg and Balanced is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Amg Gwk Small and Balanced Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Strategy and Amg Gwk 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 Gwk Small are associated (or correlated) with Balanced Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Strategy has no effect on the direction of Amg Gwk i.e., Amg Gwk and Balanced Strategy go up and down completely randomly.

Pair Corralation between Amg Gwk and Balanced Strategy

Assuming the 90 days horizon Amg Gwk is expected to generate 1.08 times less return on investment than Balanced Strategy. In addition to that, Amg Gwk is 2.32 times more volatile than Balanced Strategy Fund. It trades about 0.03 of its total potential returns per unit of risk. Balanced Strategy Fund is currently generating about 0.07 per unit of volatility. If you would invest  855.00  in Balanced Strategy Fund on October 10, 2024 and sell it today you would earn a total of  169.00  from holding Balanced Strategy Fund or generate 19.77% return on investment over 90 days.

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

Amg Gwk Small  vs.  Balanced Strategy Fund

Amg Gwk Small

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Gwk Small 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.

Balanced Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balanced Strategy Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Balanced Strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amg Gwk and Balanced Strategy

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

The idea behind Amg Gwk Small and Balanced Strategy Fund 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.