Correlation Between Amg Timessquare and Vanguard Explorer

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

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

Diversification Opportunities for Amg Timessquare and Vanguard Explorer

0.91

Correlation Coefficient

Amg Timessquare  Vanguard Explorer

Almost no diversification

The 3 months correlation between Amg and Vanguard is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Amg Timessquare Small and Vanguard Explorer Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Explorer and Amg Timessquare 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 Timessquare Small are associated (or correlated) with Vanguard Explorer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Explorer has no effect on the direction of Amg Timessquare i.e., Amg Timessquare and Vanguard Explorer go up and down completely randomly.

Pair Corralation between Amg Timessquare and Vanguard Explorer

Assuming the 90 days horizon Amg Timessquare Small is expected to generate 0.84 times more return on investment than Vanguard Explorer. However, Amg Timessquare Small is 1.19 times less risky than Vanguard Explorer. It trades about -0.1 of its potential returns per unit of risk. Vanguard Explorer Fund is currently generating about -0.16 per unit of risk. If you would invest  1,215  in Amg Timessquare Small on December 21, 2024 and sell it today you would lose (87.00) from holding Amg Timessquare Small or give up 7.16% of portfolio value over 90 days.

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

Amg Timessquare Small  vs.  Vanguard Explorer Fund

Amg Timessquare Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amg Timessquare Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Vanguard Explorer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Explorer Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Amg Timessquare and Vanguard Explorer

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

The idea behind Amg Timessquare Small and Vanguard Explorer 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.