Correlation Between Affiliated Managers and Southern
Can any of the company-specific risk be diversified away by investing in both Affiliated Managers and Southern 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 Southern 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 Southern Co, you can compare the effects of market volatilities on Affiliated Managers and Southern 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 Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Managers and Southern.
Diversification Opportunities for Affiliated Managers and Southern
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Affiliated and Southern is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group, and Southern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern 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 Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and Southern go up and down completely randomly.
Pair Corralation between Affiliated Managers and Southern
Given the investment horizon of 90 days Affiliated Managers Group, is expected to under-perform the Southern. In addition to that, Affiliated Managers is 1.26 times more volatile than Southern Co. It trades about -0.17 of its total potential returns per unit of risk. Southern Co is currently generating about -0.12 per unit of volatility. If you would invest 2,256 in Southern Co on August 28, 2024 and sell it today you would lose (45.00) from holding Southern Co or give up 1.99% 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. Southern Co
Performance |
| Timeline |
| Affiliated Managers |
| Southern |
Affiliated Managers and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affiliated Managers and Southern
The main advantage of trading using opposite Affiliated Managers and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Managers position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.| Affiliated Managers vs. Affiliated Managers Group | Affiliated Managers vs. Southern Company Series | Affiliated Managers vs. DTE Energy | Affiliated Managers vs. United States Cellular |
| Southern vs. Southern Co | Southern vs. Southern Company Series | Southern vs. ATT Inc | Southern vs. Aegon Funding |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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