Correlation Between Amg Managers and Amg Yacktman

Can any of the company-specific risk be diversified away by investing in both Amg Managers and Amg Yacktman 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 Yacktman 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 Yacktman Special, you can compare the effects of market volatilities on Amg Managers and Amg Yacktman 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 Yacktman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg Managers and Amg Yacktman.

Diversification Opportunities for Amg Managers and Amg Yacktman

0.61

Correlation Coefficient

Amg Managers  Amg Yacktman

Poor diversification

The 3 months correlation between Amg and Amg is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Amg Managers Brandywine and Amg Yacktman Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Yacktman Special 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 Yacktman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Yacktman Special has no effect on the direction of Amg Managers i.e., Amg Managers and Amg Yacktman go up and down completely randomly.

Pair Corralation between Amg Managers and Amg Yacktman

Assuming the 90 days horizon Amg Managers Brandywine is expected to generate 1.06 times more return on investment than Amg Yacktman. However, Amg Managers is 1.06 times more volatile than Amg Yacktman Special. It trades about -0.02 of its potential returns per unit of risk. Amg Yacktman Special is currently generating about -0.21 per unit of risk. If you would invest  4,139  in Amg Managers Brandywine on September 4, 2024 and sell it today you would lose (23.00) from holding Amg Managers Brandywine or give up 0.56% 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 Yacktman Special

Amg Managers Brandywine

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Managers Brandywine are ranked lower than 6 (%) 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 Yacktman Special

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg Yacktman Special has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Amg Yacktman 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 Managers and Amg Yacktman

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

The idea behind Amg Managers Brandywine and Amg Yacktman Special 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.