Correlation Between Poplar Forest and Amg Gwk

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

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

Diversification Opportunities for Poplar Forest and Amg Gwk

0.36

Correlation Coefficient

Poplar Forest  Amg Gwk

Weak diversification

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

Pair Corralation between Poplar Forest and Amg Gwk

Assuming the 90 days horizon Poplar Forest Partners is expected to under-perform the Amg Gwk. But the mutual fund apears to be less risky and, when comparing its historical volatility, Poplar Forest Partners is 1.1 times less risky than Amg Gwk. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Amg Gwk Small is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,378  in Amg Gwk Small on September 22, 2024 and sell it today you would lose (39.00) from holding Amg Gwk Small or give up 1.15% of portfolio value over 90 days.

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

Poplar Forest Partners  vs.  Amg Gwk Small

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.

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.

Pair Trading with Poplar Forest and Amg Gwk

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

The idea behind Poplar Forest Partners and Amg Gwk Small 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.