Correlation Between Affiliated Managers and Credit Enhanced
Can any of the company-specific risk be diversified away by investing in both Affiliated Managers and Credit Enhanced 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 Credit Enhanced 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 Credit Enhanced Corts, you can compare the effects of market volatilities on Affiliated Managers and Credit Enhanced 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 Credit Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Managers and Credit Enhanced.
Diversification Opportunities for Affiliated Managers and Credit Enhanced
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Affiliated and Credit is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group and Credit Enhanced Corts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Enhanced Corts 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 Credit Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Enhanced Corts has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and Credit Enhanced go up and down completely randomly.
Pair Corralation between Affiliated Managers and Credit Enhanced
Considering the 90-day investment horizon Affiliated Managers Group is expected to under-perform the Credit Enhanced. But the stock apears to be less risky and, when comparing its historical volatility, Affiliated Managers Group is 1.02 times less risky than Credit Enhanced. The stock trades about -0.33 of its potential returns per unit of risk. The Credit Enhanced Corts is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 2,737 in Credit Enhanced Corts on August 30, 2024 and sell it today you would lose (37.00) from holding Credit Enhanced Corts or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affiliated Managers Group vs. Credit Enhanced Corts
Performance |
| Timeline |
| Affiliated Managers |
| Credit Enhanced Corts |
Affiliated Managers and Credit Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affiliated Managers and Credit Enhanced
The main advantage of trading using opposite Affiliated Managers and Credit Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Managers position performs unexpectedly, Credit Enhanced 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 Credit Enhanced will offset losses from the drop in Credit Enhanced's long position.| Affiliated Managers vs. DBA Sempra 5750 | Affiliated Managers vs. CMS Energy Corp | Affiliated Managers vs. American Financial Group | Affiliated Managers vs. National Rural Utilities |
| Credit Enhanced vs. Structured Products Corp | Credit Enhanced vs. Strats Trust Cellular | Credit Enhanced vs. Goldman Sachs Capital | Credit Enhanced vs. STRATS SM Trust |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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