Correlation Between Seven West and AGF Management

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

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

Diversification Opportunities for Seven West and AGF Management

-0.13

Correlation Coefficient

Seven West  AGF Management

Good diversification

The 3 months correlation between Seven and AGF is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and Seven West 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 Seven West Media 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 Seven West i.e., Seven West and AGF Management go up and down completely randomly.

Pair Corralation between Seven West and AGF Management

Assuming the 90 days horizon Seven West Media is expected to under-perform the AGF Management. In addition to that, Seven West is 3.11 times more volatile than AGF Management Limited. It trades about 0.0 of its total potential returns per unit of risk. AGF Management Limited is currently generating about 0.11 per unit of volatility. If you would invest  664.00  in AGF Management Limited on October 26, 2024 and sell it today you would earn a total of  71.00  from holding AGF Management Limited or generate 10.69% return on investment over 90 days.

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

Seven West Media  vs.  AGF Management Limited

Seven West Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seven West Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Seven West is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

AGF Management

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, AGF Management may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Seven West and AGF Management

The main advantage of trading using opposite Seven West and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West 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 Seven West Media 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..