Correlation Between AMREP and Target
Can any of the company-specific risk be diversified away by investing in both AMREP and Target 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 AMREP and Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMREP and Target, you can compare the effects of market volatilities on AMREP and Target 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 AMREP with a short position of Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMREP and Target.
Diversification Opportunities for AMREP and Target
Poor diversification
The 3 months correlation between AMREP and Target is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AMREP and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target and AMREP 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 AMREP are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of AMREP i.e., AMREP and Target go up and down completely randomly.
Pair Corralation between AMREP and Target
Considering the 90-day investment horizon AMREP is expected to under-perform the Target. In addition to that, AMREP is 2.27 times more volatile than Target. It trades about -0.12 of its total potential returns per unit of risk. Target is currently generating about -0.18 per unit of volatility. If you would invest 17,264 in Target on January 26, 2024 and sell it today you would lose (730.00) from holding Target or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMREP vs. Target
Performance |
| Timeline |
| AMREP |
| Target |
AMREP and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMREP and Target
The main advantage of trading using opposite AMREP and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMREP position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| AMREP vs. Landsea Homes Corp | AMREP vs. Forestar Group | AMREP vs. Green Giant | AMREP vs. Five Point Holdings |
| Target vs. Costco Wholesale Corp | Target vs. BJs Wholesale Club | Target vs. Dollar Tree | Target vs. Dollar General |
Check out your portfolio center.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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