Correlation Between Amg Managers and Vanguard Small-cap

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

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

Diversification Opportunities for Amg Managers and Vanguard Small-cap

0.99

Correlation Coefficient

Amg Managers  Vanguard Small-cap

No risk reduction

The 3 months correlation between Amg and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Amg Managers Lmcg and Vanguard Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap and Amg Managers 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 Managers Lmcg are associated (or correlated) with Vanguard Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Amg Managers i.e., Amg Managers and Vanguard Small-cap go up and down completely randomly.

Pair Corralation between Amg Managers and Vanguard Small-cap

Assuming the 90 days horizon Amg Managers Lmcg is expected to generate 1.03 times more return on investment than Vanguard Small-cap. However, Amg Managers is 1.03 times more volatile than Vanguard Small Cap Growth. It trades about -0.19 of its potential returns per unit of risk. Vanguard Small Cap Growth is currently generating about -0.2 per unit of risk. If you would invest  1,747  in Amg Managers Lmcg on January 25, 2024 and sell it today you would lose (83.00) from holding Amg Managers Lmcg or give up 4.75% of portfolio value over 90 days.

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

Amg Managers Lmcg  vs.  Vanguard Small Cap Growth

Amg Managers Lmcg

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Managers Lmcg are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Amg Managers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Small Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Growth are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Vanguard Small-cap 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 Managers and Vanguard Small-cap

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

The idea behind Amg Managers Lmcg and Vanguard Small Cap Growth 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.