Correlation Between Amg Managers and Amg Timessquare

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

By analyzing existing cross correlation between Amg Managers Brandywine and Amg Timessquare Emerging, you can compare the effects of market volatilities on Amg Managers and Amg Timessquare 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 Amg Timessquare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg Managers and Amg Timessquare.

Diversification Opportunities for Amg Managers and Amg Timessquare

0.69

Correlation Coefficient

Amg Managers  Amg Timessquare

Poor diversification

The 3 months correlation between Amg and Amg is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Amg Managers Brandywine and Amg Timessquare Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Timessquare Emerging 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 Brandywine are associated (or correlated) with Amg Timessquare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Timessquare Emerging has no effect on the direction of Amg Managers i.e., Amg Managers and Amg Timessquare go up and down completely randomly.

Pair Corralation between Amg Managers and Amg Timessquare

Assuming the 90 days horizon Amg Managers Brandywine is expected to under-perform the Amg Timessquare. But the mutual fund apears to be less risky and, when comparing its historical volatility, Amg Managers Brandywine is 1.16 times less risky than Amg Timessquare. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Amg Timessquare Emerging is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,019  in Amg Timessquare Emerging on February 2, 2024 and sell it today you would lose (18.00) from holding Amg Timessquare Emerging or give up 1.77% of portfolio value over 90 days.

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

Amg Managers Brandywine  vs.  Amg Timessquare Emerging

Amg Managers Brandywine

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Managers Brandywine are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Amg Managers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amg Timessquare Emerging

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Timessquare Emerging are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Amg Timessquare is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amg Managers and Amg Timessquare

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

The idea behind Amg Managers Brandywine and Amg Timessquare Emerging 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.