Correlation Between Amg River and Clarkston Partners

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

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

Diversification Opportunities for Amg River and Clarkston Partners

0.91

Correlation Coefficient

Amg River  Clarkston Partners

Almost no diversification

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

Pair Corralation between Amg River and Clarkston Partners

Assuming the 90 days horizon Amg River Road is expected to under-perform the Clarkston Partners. In addition to that, Amg River is 2.09 times more volatile than Clarkston Partners Fund. It trades about -0.33 of its total potential returns per unit of risk. Clarkston Partners Fund is currently generating about -0.31 per unit of volatility. If you would invest  1,528  in Clarkston Partners Fund on September 23, 2024 and sell it today you would lose (91.00) from holding Clarkston Partners Fund or give up 5.96% of portfolio value over 90 days.

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

Amg River Road  vs.  Clarkston Partners Fund

Amg River Road

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg River Road has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Amg River is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Clarkston Partners

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clarkston Partners Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Clarkston Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amg River and Clarkston Partners

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

The idea behind Amg River Road and Clarkston Partners 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.