Correlation Between Alphabet and Affiliated Managers
Can any of the company-specific risk be diversified away by investing in both Alphabet 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 Alphabet and Affiliated Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Affiliated Managers Group, you can compare the effects of market volatilities on Alphabet 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 Alphabet with a short position of Affiliated Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Affiliated Managers.
Diversification Opportunities for Alphabet and Affiliated Managers
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alphabet and Affiliated is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Affiliated Managers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers and Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and Affiliated Managers go up and down completely randomly.
Pair Corralation between Alphabet and Affiliated Managers
Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the Affiliated Managers. But the stock apears to be less risky and, when comparing its historical volatility, Alphabet Inc Class C is 1.14 times less risky than Affiliated Managers. The stock trades about -0.02 of its potential returns per unit of risk. The Affiliated Managers Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 15,992 in Affiliated Managers Group on August 24, 2024 and sell it today you would earn a total of 2,667 from holding Affiliated Managers Group or generate 16.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Affiliated Managers Group
Performance |
| Timeline |
| Alphabet Class C |
| Affiliated Managers |
Alphabet and Affiliated Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Affiliated Managers
The main advantage of trading using opposite Alphabet and Affiliated Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class C 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. Brightsphere Investment Group | Affiliated Managers vs. Franklin Templeton Limited | Affiliated Managers vs. Blackrock Muni Intermediate | Affiliated Managers vs. Munivest Fund |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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