Correlation Between Amg Gwk and Templeton Dragon

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

By analyzing existing cross correlation between Amg Gwk E and Templeton Dragon Closed, you can compare the effects of market volatilities on Amg Gwk and Templeton Dragon 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 Templeton Dragon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg Gwk and Templeton Dragon.

Diversification Opportunities for Amg Gwk and Templeton Dragon

0.71

Correlation Coefficient

Amg Gwk  Templeton Dragon

Poor diversification

The 3 months correlation between Amg and Templeton is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Amg Gwk E and Templeton Dragon Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Dragon Closed 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 E are associated (or correlated) with Templeton Dragon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Dragon Closed has no effect on the direction of Amg Gwk i.e., Amg Gwk and Templeton Dragon go up and down completely randomly.

Pair Corralation between Amg Gwk and Templeton Dragon

Assuming the 90 days horizon Amg Gwk is expected to generate 8.3 times less return on investment than Templeton Dragon. But when comparing it to its historical volatility, Amg Gwk E is 4.55 times less risky than Templeton Dragon. It trades about 0.09 of its potential returns per unit of risk. Templeton Dragon Closed is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  856.00  in Templeton Dragon Closed on December 27, 2024 and sell it today you would earn a total of  135.00  from holding Templeton Dragon Closed or generate 15.77% return on investment over 90 days.

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

Amg Gwk E  vs.  Templeton Dragon Closed

Amg Gwk E

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Gwk E are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Amg Gwk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Templeton Dragon Closed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Dragon Closed are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly inconsistent fundamental indicators, Templeton Dragon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amg Gwk and Templeton Dragon

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

The idea behind Amg Gwk E and Templeton Dragon Closed 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.