Correlation Between Amg Southernsun and Spectrum Low

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

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

Diversification Opportunities for Amg Southernsun and Spectrum Low

0.31

Correlation Coefficient

Amg Southernsun  Spectrum Low

Weak diversification

The 3 months correlation between Amg and Spectrum is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Amg Southernsun Small and Spectrum Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Low Volatility and Amg Southernsun 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 Southernsun Small are associated (or correlated) with Spectrum Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Low Volatility has no effect on the direction of Amg Southernsun i.e., Amg Southernsun and Spectrum Low go up and down completely randomly.

Pair Corralation between Amg Southernsun and Spectrum Low

Assuming the 90 days horizon Amg Southernsun Small is expected to generate 4.97 times more return on investment than Spectrum Low. However, Amg Southernsun is 4.97 times more volatile than Spectrum Low Volatility. It trades about 0.06 of its potential returns per unit of risk. Spectrum Low Volatility is currently generating about 0.07 per unit of risk. If you would invest  2,684  in Amg Southernsun Small on September 12, 2024 and sell it today you would earn a total of  426.00  from holding Amg Southernsun Small or generate 15.87% return on investment over 90 days.

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

Amg Southernsun Small  vs.  Spectrum Low Volatility

Amg Southernsun Small

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Southernsun Small are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Amg Southernsun is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Spectrum Low Volatility

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Spectrum Low Volatility are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Spectrum Low is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amg Southernsun and Spectrum Low

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

The idea behind Amg Southernsun Small and Spectrum Low Volatility 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.