Correlation Between Metropolitan West and Amg Managers

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

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

Diversification Opportunities for Metropolitan West and Amg Managers

0.03

Correlation Coefficient

Metropolitan West  Amg Managers

Significant diversification

The 3 months correlation between Metropolitan and Amg is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West High and Amg Managers Centersquare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Centersquare and Metropolitan West 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 Metropolitan West High 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 Centersquare has no effect on the direction of Metropolitan West i.e., Metropolitan West and Amg Managers go up and down completely randomly.

Pair Corralation between Metropolitan West and Amg Managers

Assuming the 90 days horizon Metropolitan West is expected to generate 1.5 times less return on investment than Amg Managers. But when comparing it to its historical volatility, Metropolitan West High is 4.3 times less risky than Amg Managers. It trades about 0.12 of its potential returns per unit of risk. Amg Managers Centersquare is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  961.00  in Amg Managers Centersquare on September 15, 2024 and sell it today you would earn a total of  230.00  from holding Amg Managers Centersquare or generate 23.93% return on investment over 90 days.

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

Metropolitan West High  vs.  Amg Managers Centersquare

Metropolitan West High

Risk-Adjusted Performance

0 of 100

Weak

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

Amg Managers Centersquare

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Metropolitan West and Amg Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West 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 Metropolitan West High and Amg Managers Centersquare 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.