Correlation Between Royce Premier and Amg Yacktman

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

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

Diversification Opportunities for Royce Premier and Amg Yacktman

0.78

Correlation Coefficient

Royce Premier  Amg Yacktman

Poor diversification

The 3 months correlation between Royce and Amg is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Royce Premier Fund and Amg Yacktman Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Yacktman and Royce Premier 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 Premier Fund 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 has no effect on the direction of Royce Premier i.e., Royce Premier and Amg Yacktman go up and down completely randomly.

Pair Corralation between Royce Premier and Amg Yacktman

Assuming the 90 days horizon Royce Premier Fund is expected to generate 2.1 times more return on investment than Amg Yacktman. However, Royce Premier is 2.1 times more volatile than Amg Yacktman Fund. It trades about 0.11 of its potential returns per unit of risk. Amg Yacktman Fund is currently generating about 0.08 per unit of risk. If you would invest  1,192  in Royce Premier Fund on September 13, 2024 and sell it today you would earn a total of  81.00  from holding Royce Premier Fund or generate 6.8% return on investment over 90 days.

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

Royce Premier Fund  vs.  Amg Yacktman Fund

Royce Premier

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Royce Premier Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Royce Premier may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Amg Yacktman

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Yacktman Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Amg Yacktman 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 Premier and Amg Yacktman

The main advantage of trading using opposite Royce Premier and Amg Yacktman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royce Premier 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 Royce Premier Fund and Amg Yacktman 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.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.