Correlation Between Royce Opportunity and Amg Timessquare

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

By analyzing existing cross correlation between Royce Opportunity Fund and Amg Timessquare Emerging, you can compare the effects of market volatilities on Royce Opportunity and Amg Timessquare 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 Royce Opportunity with a short position of Amg Timessquare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Opportunity and Amg Timessquare.

Diversification Opportunities for Royce Opportunity and Amg Timessquare

0.44

Correlation Coefficient

Royce Opportunity  Amg Timessquare

Very weak diversification

The 3 months correlation between Royce and Amg is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Royce Opportunity Fund and Amg Timessquare Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Timessquare Emerging and Royce Opportunity 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 Royce Opportunity Fund are associated (or correlated) with Amg Timessquare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Timessquare Emerging has no effect on the direction of Royce Opportunity i.e., Royce Opportunity and Amg Timessquare go up and down completely randomly.

Pair Corralation between Royce Opportunity and Amg Timessquare

Assuming the 90 days horizon Royce Opportunity Fund is expected to under-perform the Amg Timessquare. In addition to that, Royce Opportunity is 85.73 times more volatile than Amg Timessquare Emerging. It trades about -0.28 of its total potential returns per unit of risk. Amg Timessquare Emerging is currently generating about 0.22 per unit of volatility. If you would invest  898.00  in Amg Timessquare Emerging on September 28, 2024 and sell it today you would earn a total of  1.00  from holding Amg Timessquare Emerging or generate 0.11% return on investment over 90 days.

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

Royce Opportunity Fund  vs.  Amg Timessquare Emerging

Royce Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royce Opportunity Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Royce Opportunity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amg Timessquare Emerging

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Timessquare Emerging are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Amg Timessquare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Royce Opportunity and Amg Timessquare

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

The idea behind Royce Opportunity Fund and Amg Timessquare Emerging 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..