Correlation Between Amg Renaissance and Edgewood Growth

Can any of the company-specific risk be diversified away by investing in both Amg Renaissance and Edgewood Growth 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 Edgewood Growth 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 Edgewood Growth Fund, you can compare the effects of market volatilities on Amg Renaissance and Edgewood Growth 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 Edgewood Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg Renaissance and Edgewood Growth.

Diversification Opportunities for Amg Renaissance and Edgewood Growth

0.89

Correlation Coefficient

Amg Renaissance  Edgewood Growth

Very poor diversification

The 3 months correlation between Amg and Edgewood is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Amg Renaissance Large and Edgewood Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewood Growth 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 Edgewood Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewood Growth has no effect on the direction of Amg Renaissance i.e., Amg Renaissance and Edgewood Growth go up and down completely randomly.

Pair Corralation between Amg Renaissance and Edgewood Growth

Assuming the 90 days horizon Amg Renaissance Large is expected to generate 0.58 times more return on investment than Edgewood Growth. However, Amg Renaissance Large is 1.73 times less risky than Edgewood Growth. It trades about -0.34 of its potential returns per unit of risk. Edgewood Growth Fund is currently generating about -0.24 per unit of risk. If you would invest  2,113  in Amg Renaissance Large on October 5, 2024 and sell it today you would lose (327.00) from holding Amg Renaissance Large or give up 15.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Amg Renaissance Large  vs.  Edgewood Growth Fund

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 fairly strong basic indicators, Amg Renaissance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Edgewood Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edgewood Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Amg Renaissance and Edgewood Growth

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

The idea behind Amg Renaissance Large and Edgewood Growth Fund 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.