Correlation Between Perritt Microcap and Amg Fq

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

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

Diversification Opportunities for Perritt Microcap and Amg Fq

0.27

Correlation Coefficient

Perritt Microcap  Amg Fq

Modest diversification

The 3 months correlation between Perritt and Amg is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Perritt Microcap Opportunities and Amg Fq Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Fq Long and Perritt Microcap 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 Perritt Microcap Opportunities are associated (or correlated) with Amg Fq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Fq Long has no effect on the direction of Perritt Microcap i.e., Perritt Microcap and Amg Fq go up and down completely randomly.

Pair Corralation between Perritt Microcap and Amg Fq

Assuming the 90 days horizon Perritt Microcap Opportunities is expected to under-perform the Amg Fq. In addition to that, Perritt Microcap is 1.61 times more volatile than Amg Fq Long Short. It trades about -0.14 of its total potential returns per unit of risk. Amg Fq Long Short is currently generating about 0.08 per unit of volatility. If you would invest  2,013  in Amg Fq Long Short on December 28, 2024 and sell it today you would earn a total of  70.00  from holding Amg Fq Long Short or generate 3.48% return on investment over 90 days.

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

Perritt Microcap Opportunities  vs.  Amg Fq Long Short

Perritt Microcap Opp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perritt Microcap Opportunities 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.

Amg Fq Long

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Fq Long Short are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Amg Fq is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Perritt Microcap and Amg Fq

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

The idea behind Perritt Microcap Opportunities and Amg Fq Long Short 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.