Correlation Between Amg Managers and Real Estate

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

By analyzing existing cross correlation between Amg Managers Centersquare and Real Estate Ultrasector, you can compare the effects of market volatilities on Amg Managers and Real Estate 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 Managers with a short position of Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg Managers and Real Estate.

Diversification Opportunities for Amg Managers and Real Estate

0.8

Correlation Coefficient

Amg Managers  Real Estate

Very poor diversification

The 3 months correlation between Amg and Real is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Amg Managers Centersquare and Real Estate Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Ultrasector and Amg Managers 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 Managers Centersquare are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Ultrasector has no effect on the direction of Amg Managers i.e., Amg Managers and Real Estate go up and down completely randomly.

Pair Corralation between Amg Managers and Real Estate

Assuming the 90 days horizon Amg Managers is expected to generate 2.63 times less return on investment than Real Estate. But when comparing it to its historical volatility, Amg Managers Centersquare is 1.54 times less risky than Real Estate. It trades about 0.02 of its potential returns per unit of risk. Real Estate Ultrasector is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,051  in Real Estate Ultrasector on December 27, 2024 and sell it today you would earn a total of  136.00  from holding Real Estate Ultrasector or generate 3.36% return on investment over 90 days.

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

Amg Managers Centersquare  vs.  Real Estate Ultrasector

Amg Managers Centersquare

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Managers Centersquare 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 Managers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Real Estate Ultrasector

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Real Estate Ultrasector are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Real Estate 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 Managers and Real Estate

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

The idea behind Amg Managers Centersquare and Real Estate Ultrasector 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.