Correlation Between Affiliated Managers and Principal Financial
Can any of the company-specific risk be diversified away by investing in both Affiliated Managers and Principal Financial 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 Principal Financial 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 Principal Financial Group, you can compare the effects of market volatilities on Affiliated Managers and Principal Financial 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 Principal Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Managers and Principal Financial.
Diversification Opportunities for Affiliated Managers and Principal Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Affiliated and Principal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group and Principal Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Financial 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 Principal Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Financial has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and Principal Financial go up and down completely randomly.
Pair Corralation between Affiliated Managers and Principal Financial
Considering the 90-day investment horizon Affiliated Managers Group is expected to under-perform the Principal Financial. In addition to that, Affiliated Managers is 1.66 times more volatile than Principal Financial Group. It trades about -0.05 of its total potential returns per unit of risk. Principal Financial Group is currently generating about 0.11 per unit of volatility. If you would invest 8,449 in Principal Financial Group on August 28, 2024 and sell it today you would earn a total of 255.00 from holding Principal Financial Group or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affiliated Managers Group vs. Principal Financial Group
Performance |
| Timeline |
| Affiliated Managers |
| Principal Financial |
Affiliated Managers and Principal Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affiliated Managers and Principal Financial
The main advantage of trading using opposite Affiliated Managers and Principal Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Managers position performs unexpectedly, Principal Financial 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 Principal Financial will offset losses from the drop in Principal Financial'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 |
| Principal Financial vs. State Street Corp | Principal Financial vs. Bank of New | Principal Financial vs. SEI Investments | Principal Financial vs. Affiliated Managers Group |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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