Correlation Between Perkins Mid and Amg Managers

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

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

Diversification Opportunities for Perkins Mid and Amg Managers

0.68

Correlation Coefficient

Perkins Mid  Amg Managers

Poor diversification

The 3 months correlation between Perkins and Amg is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Perkins Mid Cap and Amg Managers Fairpointe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Fairpointe and Perkins Mid 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 Perkins Mid Cap 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 Fairpointe has no effect on the direction of Perkins Mid i.e., Perkins Mid and Amg Managers go up and down completely randomly.

Pair Corralation between Perkins Mid and Amg Managers

Assuming the 90 days horizon Perkins Mid Cap is expected to under-perform the Amg Managers. But the mutual fund apears to be less risky and, when comparing its historical volatility, Perkins Mid Cap is 1.2 times less risky than Amg Managers. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Amg Managers Fairpointe is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  2,394  in Amg Managers Fairpointe on September 22, 2024 and sell it today you would lose (235.00) from holding Amg Managers Fairpointe or give up 9.82% of portfolio value over 90 days.

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

Perkins Mid Cap  vs.  Amg Managers Fairpointe

Perkins Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Amg Managers Fairpointe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg Managers Fairpointe has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Perkins Mid and Amg Managers

The main advantage of trading using opposite Perkins Mid and Amg Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perkins Mid 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 Perkins Mid Cap and Amg Managers Fairpointe 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 .