Correlation Between AMP and Big Lots

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Can any of the company-specific risk be diversified away by investing in both AMP and Big Lots 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 AMP and Big Lots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMP LIMITED and Big Lots, you can compare the effects of market volatilities on AMP and Big Lots 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 AMP with a short position of Big Lots. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMP and Big Lots.

Diversification Opportunities for AMP and Big Lots

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between AMP and Big Lots is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding AMP LIMITED and Big Lots in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Lots and AMP 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 AMP LIMITED are associated (or correlated) with Big Lots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Lots has no effect on the direction of AMP i.e., AMP and Big Lots go up and down completely randomly.

Pair Corralation between AMP and Big Lots

Assuming the 90 days horizon AMP LIMITED is expected to generate 0.69 times more return on investment than Big Lots. However, AMP LIMITED is 1.45 times less risky than Big Lots. It trades about -0.11 of its potential returns per unit of risk. Big Lots is currently generating about -0.18 per unit of risk. If you would invest  314.00  in AMP LIMITED on March 28, 2022 and sell it today you would lose (19.00)  from holding AMP LIMITED or give up 6.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

AMP LIMITED  vs.  Big Lots

 Performance (%) 
      Timeline 
AMP LIMITED 
AMP Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in AMP LIMITED are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, AMP may actually be approaching a critical reversion point that can send shares even higher in July 2022.

Structure and Payout Changes

Forward Annual Dividend Yield
0.18
Forward Annual Dividend Rate
0.58
Dividend Date
2020-10-08
Ex Dividend Date
2020-09-17

AMP Price Channel

Big Lots 
Big Lots Performance
0 of 100
Over the last 90 days Big Lots has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of sluggish performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in July 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Big Lots Price Channel

AMP and Big Lots Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with AMP and Big Lots

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

AMP LIMITED

Pair trading matchups for AMP

The idea behind AMP LIMITED and Big Lots 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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