Correlation Between World Energy and Amg Managers

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

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

Diversification Opportunities for World Energy and Amg Managers

0.11

Correlation Coefficient

World Energy  Amg Managers

Average diversification

The 3 months correlation between World and Amg is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Amg Managers Brandywine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Brandywine and World Energy 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 World Energy Fund are associated (or correlated) with Amg Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Managers Brandywine has no effect on the direction of World Energy i.e., World Energy and Amg Managers go up and down completely randomly.

Pair Corralation between World Energy and Amg Managers

Assuming the 90 days horizon World Energy Fund is expected to under-perform the Amg Managers. In addition to that, World Energy is 1.73 times more volatile than Amg Managers Brandywine. It trades about -0.11 of its total potential returns per unit of risk. Amg Managers Brandywine is currently generating about -0.03 per unit of volatility. If you would invest  4,138  in Amg Managers Brandywine on September 12, 2024 and sell it today you would lose (16.00) from holding Amg Managers Brandywine or give up 0.39% of portfolio value over 90 days.

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

World Energy Fund  vs.  Amg Managers Brandywine

World Energy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in World Energy Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, World Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Amg Managers Brandywine

Risk-Adjusted Performance

4 of 100

Modest

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.

Pair Trading with World Energy and Amg Managers

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

The idea behind World Energy Fund and Amg Managers Brandywine 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .