Correlation Between Dlocal and Affiliated Managers
Can any of the company-specific risk be diversified away by investing in both Dlocal and Affiliated Managers 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 Dlocal and Affiliated Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dlocal and Affiliated Managers Group, you can compare the effects of market volatilities on Dlocal and Affiliated Managers 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 Dlocal with a short position of Affiliated Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dlocal and Affiliated Managers.
Diversification Opportunities for Dlocal and Affiliated Managers
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dlocal and Affiliated is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dlocal and Affiliated Managers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers and Dlocal 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 Dlocal are associated (or correlated) with Affiliated Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Managers has no effect on the direction of Dlocal i.e., Dlocal and Affiliated Managers go up and down completely randomly.
Pair Corralation between Dlocal and Affiliated Managers
Considering the 90-day investment horizon Dlocal is expected to generate 1.98 times more return on investment than Affiliated Managers. However, Dlocal is 1.98 times more volatile than Affiliated Managers Group. It trades about 0.35 of its potential returns per unit of risk. Affiliated Managers Group is currently generating about 0.11 per unit of risk. If you would invest 1,147 in Dlocal on November 4, 2024 and sell it today you would earn a total of 173.00 from holding Dlocal or generate 15.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dlocal vs. Affiliated Managers Group
Performance |
| Timeline |
| Dlocal |
| Affiliated Managers |
Dlocal and Affiliated Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dlocal and Affiliated Managers
The main advantage of trading using opposite Dlocal and Affiliated Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dlocal position performs unexpectedly, Affiliated Managers 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 Affiliated Managers will offset losses from the drop in Affiliated Managers' long position.The idea behind Dlocal and Affiliated Managers Group 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.| Affiliated Managers vs. DBA Sempra 5750 | Affiliated Managers vs. CMS Energy Corp | Affiliated Managers vs. American Financial Group | Affiliated Managers vs. National Rural Utilities |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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