Correlation Between Fundamental Large and Amg Managers

Can any of the company-specific risk be diversified away by investing in both Fundamental 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 Fundamental 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 Fundamental Large Cap and Amg Managers Centersquare, you can compare the effects of market volatilities on Fundamental 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 Fundamental Large with a short position of Amg Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Large and Amg Managers.

Diversification Opportunities for Fundamental Large and Amg Managers

0.78

Correlation Coefficient

Fundamental Large  Amg Managers

Poor diversification

The 3 months correlation between Fundamental and Amg is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental 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 Fundamental 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 Fundamental 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 Fundamental Large i.e., Fundamental Large and Amg Managers go up and down completely randomly.

Pair Corralation between Fundamental Large and Amg Managers

Assuming the 90 days horizon Fundamental Large Cap is expected to generate 0.79 times more return on investment than Amg Managers. However, Fundamental Large Cap is 1.27 times less risky than Amg Managers. It trades about 0.06 of its potential returns per unit of risk. Amg Managers Centersquare is currently generating about 0.02 per unit of risk. If you would invest  5,381  in Fundamental Large Cap on October 22, 2024 and sell it today you would earn a total of  44.00  from holding Fundamental Large Cap or generate 0.82% return on investment over 90 days.

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

Fundamental Large Cap  vs.  Amg Managers Centersquare

Fundamental Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundamental Large Cap 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 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 Fundamental Large and Amg Managers

The main advantage of trading using opposite Fundamental Large and Amg Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundamental 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 Fundamental 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.