Correlation Between CARPENTER and Amg Gwk

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

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

Diversification Opportunities for CARPENTER and Amg Gwk

0.29

Correlation Coefficient

CARPENTER  Amg Gwk

Modest diversification

The 3 months correlation between CARPENTER and Amg is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding CARPENTER TECHNOLOGY P and Amg Gwk Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Gwk Small and CARPENTER 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 CARPENTER TECHNOLOGY P are associated (or correlated) with Amg Gwk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Gwk Small has no effect on the direction of CARPENTER i.e., CARPENTER and Amg Gwk go up and down completely randomly.

Pair Corralation between CARPENTER and Amg Gwk

Assuming the 90 days trading horizon CARPENTER TECHNOLOGY P is expected to generate 0.26 times more return on investment than Amg Gwk. However, CARPENTER TECHNOLOGY P is 3.9 times less risky than Amg Gwk. It trades about 0.0 of its potential returns per unit of risk. Amg Gwk Small is currently generating about -0.11 per unit of risk. If you would invest  9,996  in CARPENTER TECHNOLOGY P on December 24, 2024 and sell it today you would earn a total of  3.00  from holding CARPENTER TECHNOLOGY P or generate 0.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

CARPENTER TECHNOLOGY P  vs.  Amg Gwk Small

CARPENTER TECHNOLOGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days CARPENTER TECHNOLOGY P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CARPENTER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Amg Gwk Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amg Gwk 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.

Pair Trading with CARPENTER and Amg Gwk

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

The idea behind CARPENTER TECHNOLOGY P and Amg Gwk Small 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.