Correlation Between T Rowe and AGF Management

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

By analyzing existing cross correlation between T Rowe Price and AGF Management Limited, you can compare the effects of market volatilities on T Rowe and AGF Management 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 T Rowe with a short position of AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and AGF Management.

Diversification Opportunities for T Rowe and AGF Management

0.84

Correlation Coefficient

T Rowe  AGF Management

Very poor diversification

The 3 months correlation between TR1 and AGF is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and T Rowe 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 T Rowe Price are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of T Rowe i.e., T Rowe and AGF Management go up and down completely randomly.

Pair Corralation between T Rowe and AGF Management

Assuming the 90 days horizon T Rowe Price is expected to generate 1.27 times more return on investment than AGF Management. However, T Rowe is 1.27 times more volatile than AGF Management Limited. It trades about 0.23 of its potential returns per unit of risk. AGF Management Limited is currently generating about 0.2 per unit of risk. If you would invest  10,362  in T Rowe Price on August 31, 2024 and sell it today you would earn a total of  1,382  from holding T Rowe Price or generate 13.34% return on investment over 90 days.

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

T Rowe Price  vs.  AGF Management Limited

T Rowe Price

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T Rowe Price are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, T Rowe reported solid returns over the last few months and may actually be approaching a breakup point.

AGF Management

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AGF Management reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T Rowe and AGF Management

The main advantage of trading using opposite T Rowe and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, AGF Management 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 AGF Management will offset losses from the drop in AGF Management's long position.

The idea behind T Rowe Price and AGF Management Limited 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.