Correlation Between Amg Gwk and Poplar Forest

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

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

Diversification Opportunities for Amg Gwk and Poplar Forest

0.36

Correlation Coefficient

Amg Gwk  Poplar Forest

Weak diversification

The 3 months correlation between Amg and Poplar is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Amg Gwk Small and Poplar Forest Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poplar Forest Partners and Amg Gwk 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 Gwk Small are associated (or correlated) with Poplar Forest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poplar Forest Partners has no effect on the direction of Amg Gwk i.e., Amg Gwk and Poplar Forest go up and down completely randomly.

Pair Corralation between Amg Gwk and Poplar Forest

Assuming the 90 days horizon Amg Gwk Small is expected to generate 1.36 times more return on investment than Poplar Forest. However, Amg Gwk is 1.36 times more volatile than Poplar Forest Partners. It trades about 0.04 of its potential returns per unit of risk. Poplar Forest Partners is currently generating about 0.01 per unit of risk. If you would invest  2,796  in Amg Gwk Small on September 22, 2024 and sell it today you would earn a total of  543.00  from holding Amg Gwk Small or generate 19.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Amg Gwk Small  vs.  Poplar Forest Partners

Amg Gwk Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Poplar Forest Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poplar Forest Partners has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Amg Gwk and Poplar Forest

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

The idea behind Amg Gwk Small and Poplar Forest Partners 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.