Correlation Between Prudential Global and Amg Managers

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

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

Diversification Opportunities for Prudential Global and Amg Managers

-0.86

Correlation Coefficient

Prudential Global  Amg Managers

Pay attention - limited upside

The 3 months correlation between Prudential and Amg is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Global Total and Amg Managers Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Global and Prudential Global 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 Prudential Global Total 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 Global has no effect on the direction of Prudential Global i.e., Prudential Global and Amg Managers go up and down completely randomly.

Pair Corralation between Prudential Global and Amg Managers

Assuming the 90 days horizon Prudential Global Total is expected to under-perform the Amg Managers. In addition to that, Prudential Global is 11.96 times more volatile than Amg Managers Global. It trades about -0.07 of its total potential returns per unit of risk. Amg Managers Global is currently generating about 0.18 per unit of volatility. If you would invest  2,077  in Amg Managers Global on August 31, 2024 and sell it today you would earn a total of  1.00  from holding Amg Managers Global or generate 0.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	14.29%
Values	Daily Returns

Prudential Global Total  vs.  Amg Managers Global

Prudential Global Total

Risk-Adjusted Performance

0 of 100

Very Weak

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

Amg Managers Global

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Amg Managers Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, 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 Prudential Global and Amg Managers

The main advantage of trading using opposite Prudential Global and Amg Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Global 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 Prudential Global Total and Amg Managers Global 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..