Correlation Between Affiliated Managers and Northern Trust
Can any of the company-specific risk be diversified away by investing in both Affiliated Managers and Northern Trust 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 Northern Trust 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 Northern Trust, you can compare the effects of market volatilities on Affiliated Managers and Northern Trust 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 Northern Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Managers and Northern Trust.
Diversification Opportunities for Affiliated Managers and Northern Trust
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Affiliated and Northern is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust 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 Northern Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Trust has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and Northern Trust go up and down completely randomly.
Pair Corralation between Affiliated Managers and Northern Trust
Considering the 90-day investment horizon Affiliated Managers is expected to generate 8.79 times less return on investment than Northern Trust. But when comparing it to its historical volatility, Affiliated Managers Group is 1.04 times less risky than Northern Trust. It trades about 0.05 of its potential returns per unit of risk. Northern Trust is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 10,222 in Northern Trust on November 9, 2024 and sell it today you would earn a total of 1,158 from holding Northern Trust or generate 11.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affiliated Managers Group vs. Northern Trust
Performance |
| Timeline |
| Affiliated Managers |
| Northern Trust |
Affiliated Managers and Northern Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affiliated Managers and Northern Trust
The main advantage of trading using opposite Affiliated Managers and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Managers position performs unexpectedly, Northern Trust 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 Northern Trust will offset losses from the drop in Northern Trust's long position.| Affiliated Managers vs. Franklin Templeton Limited | Affiliated Managers vs. Blackrock Muni Intermediate | Affiliated Managers vs. Munivest Fund | Affiliated Managers vs. Blackrock Floating Rate |
| Northern Trust vs. Bank of New | Northern Trust vs. Invesco Plc | Northern Trust vs. Franklin Resources | Northern Trust 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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