Correlation Between Affiliated Managers and Bank of New York
Can any of the company-specific risk be diversified away by investing in both Affiliated Managers and Bank of New York 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 Affiliated Managers and Bank of New York into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affiliated Managers Group and Bank of New, you can compare the effects of market volatilities on Affiliated Managers and Bank of New York 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 Affiliated Managers with a short position of Bank of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Managers and Bank of New York.
Diversification Opportunities for Affiliated Managers and Bank of New York
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Affiliated and Bank is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group and Bank of New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York and Affiliated 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 Affiliated Managers Group are associated (or correlated) with Bank of New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and Bank of New York go up and down completely randomly.
Pair Corralation between Affiliated Managers and Bank of New York
Considering the 90-day investment horizon Affiliated Managers is expected to generate 1.5 times less return on investment than Bank of New York. In addition to that, Affiliated Managers is 1.41 times more volatile than Bank of New. It trades about 0.1 of its total potential returns per unit of risk. Bank of New is currently generating about 0.21 per unit of volatility. If you would invest 4,577 in Bank of New on August 24, 2024 and sell it today you would earn a total of 3,435 from holding Bank of New or generate 75.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Affiliated Managers Group vs. Bank of New
Performance |
| Timeline |
| Affiliated Managers |
| Bank of New York |
Affiliated Managers and Bank of New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affiliated Managers and Bank of New York
The main advantage of trading using opposite Affiliated Managers and Bank of New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Managers position performs unexpectedly, Bank of New York 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 Bank of New York will offset losses from the drop in Bank of New York's long position.| Affiliated Managers vs. Brightsphere Investment Group | Affiliated Managers vs. Franklin Templeton Limited | Affiliated Managers vs. Blackrock Muni Intermediate | Affiliated Managers vs. Munivest Fund |
| Bank of New York vs. Northern Trust | Bank of New York vs. Invesco Plc | Bank of New York vs. Franklin Resources | Bank of New York vs. T Rowe Price |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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