Correlation Between Amg Managers and Barloworld

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

By analyzing existing cross correlation between Amg Managers Skyline and Barloworld Ltd ADR, you can compare the effects of market volatilities on Amg Managers and Barloworld 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 Managers with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg Managers and Barloworld.

Diversification Opportunities for Amg Managers and Barloworld

0.57

Correlation Coefficient

Amg Managers  Barloworld

Very weak diversification

The 3 months correlation between Amg and Barloworld is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Amg Managers Skyline and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and Amg Managers 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 Managers Skyline are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of Amg Managers i.e., Amg Managers and Barloworld go up and down completely randomly.

Pair Corralation between Amg Managers and Barloworld

Assuming the 90 days horizon Amg Managers Skyline is expected to under-perform the Barloworld. But the mutual fund apears to be less risky and, when comparing its historical volatility, Amg Managers Skyline is 4.0 times less risky than Barloworld. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Barloworld Ltd ADR is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  586.00  in Barloworld Ltd ADR on December 21, 2024 and sell it today you would lose (61.00) from holding Barloworld Ltd ADR or give up 10.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.33%
Values	Daily Returns

Amg Managers Skyline  vs.  Barloworld Ltd ADR

Amg Managers Skyline

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amg Managers Skyline 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.

Barloworld ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barloworld Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Amg Managers and Barloworld

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

The idea behind Amg Managers Skyline and Barloworld Ltd ADR 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.