Correlation Between Amg Fq and Perritt Microcap

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

By analyzing existing cross correlation between Amg Fq Long Short and Perritt Microcap Opportunities, you can compare the effects of market volatilities on Amg Fq and Perritt Microcap 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 Fq with a short position of Perritt Microcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg Fq and Perritt Microcap.

Diversification Opportunities for Amg Fq and Perritt Microcap

0.26

Correlation Coefficient

Amg Fq  Perritt Microcap

Modest diversification

The 3 months correlation between Amg and Perritt is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Amg Fq Long Short and Perritt Microcap Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perritt Microcap Opp and Amg Fq 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 Fq Long Short are associated (or correlated) with Perritt Microcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perritt Microcap Opp has no effect on the direction of Amg Fq i.e., Amg Fq and Perritt Microcap go up and down completely randomly.

Pair Corralation between Amg Fq and Perritt Microcap

Assuming the 90 days horizon Amg Fq Long Short is expected to generate 0.55 times more return on investment than Perritt Microcap. However, Amg Fq Long Short is 1.83 times less risky than Perritt Microcap. It trades about 0.16 of its potential returns per unit of risk. Perritt Microcap Opportunities is currently generating about 0.03 per unit of risk. If you would invest  1,664  in Amg Fq Long Short on September 12, 2024 and sell it today you would earn a total of  525.00  from holding Amg Fq Long Short or generate 31.55% return on investment over 90 days.

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

Amg Fq Long Short  vs.  Perritt Microcap Opportunities

Amg Fq Long

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Fq Long Short are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Amg Fq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Perritt Microcap Opp

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Perritt Microcap Opportunities are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Perritt Microcap 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 Fq and Perritt Microcap

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

The idea behind Amg Fq Long Short and Perritt Microcap Opportunities 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 Transaction History module to view history of all your transactions and understand their impact on performance.