Correlation Between Amg Renaissance and Amg Yacktman

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

By analyzing existing cross correlation between Amg Renaissance Large and Amg Yacktman Focused, you can compare the effects of market volatilities on Amg Renaissance and Amg Yacktman 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 Renaissance with a short position of Amg Yacktman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg Renaissance and Amg Yacktman.

Diversification Opportunities for Amg Renaissance and Amg Yacktman

0.78

Correlation Coefficient

Amg Renaissance  Amg Yacktman

Poor diversification

The 3 months correlation between Amg and Amg is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Amg Renaissance Large and Amg Yacktman Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Yacktman Focused and Amg Renaissance 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 Renaissance Large are associated (or correlated) with Amg Yacktman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Yacktman Focused has no effect on the direction of Amg Renaissance i.e., Amg Renaissance and Amg Yacktman go up and down completely randomly.

Pair Corralation between Amg Renaissance and Amg Yacktman

Assuming the 90 days horizon Amg Renaissance Large is expected to under-perform the Amg Yacktman. In addition to that, Amg Renaissance is 1.01 times more volatile than Amg Yacktman Focused. It trades about -0.26 of its total potential returns per unit of risk. Amg Yacktman Focused is currently generating about -0.25 per unit of volatility. If you would invest  2,105  in Amg Yacktman Focused on October 11, 2024 and sell it today you would lose (244.00) from holding Amg Yacktman Focused or give up 11.59% of portfolio value over 90 days.

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

Amg Renaissance Large  vs.  Amg Yacktman Focused

Amg Renaissance Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg Renaissance Large 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 Yacktman Focused

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg Yacktman Focused has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Amg Renaissance and Amg Yacktman

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

The idea behind Amg Renaissance Large and Amg Yacktman Focused 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.