Correlation Between Amg Frontier and Amg Managers

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

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

Diversification Opportunities for Amg Frontier and Amg Managers

-0.26

Correlation Coefficient

Amg Frontier  Amg Managers

Very good diversification

The 3 months correlation between Amg and Amg is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Amg Frontier Small and Amg Managers Cadence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Cadence and Amg Frontier 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 Frontier Small 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 Cadence has no effect on the direction of Amg Frontier i.e., Amg Frontier and Amg Managers go up and down completely randomly.

Pair Corralation between Amg Frontier and Amg Managers

Assuming the 90 days horizon Amg Frontier Small is expected to generate 2.35 times more return on investment than Amg Managers. However, Amg Frontier is 2.35 times more volatile than Amg Managers Cadence. It trades about -0.06 of its potential returns per unit of risk. Amg Managers Cadence is currently generating about -0.23 per unit of risk. If you would invest  1,014  in Amg Frontier Small on September 22, 2024 and sell it today you would lose (70.00) from holding Amg Frontier Small or give up 6.9% of portfolio value over 90 days.

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

Amg Frontier Small  vs.  Amg Managers Cadence

Amg Frontier Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Amg Managers Cadence

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Amg Frontier and Amg Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amg Frontier 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 Amg Frontier Small and Amg Managers Cadence 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.