Correlation Between Southern and Affiliated Managers
Can any of the company-specific risk be diversified away by investing in both Southern 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 Southern and Affiliated Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Co and Affiliated Managers Group,, you can compare the effects of market volatilities on Southern 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 Southern with a short position of Affiliated Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern and Affiliated Managers.
Diversification Opportunities for Southern and Affiliated Managers
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Southern and Affiliated is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Southern Co and Affiliated Managers Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers and Southern 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 Southern Co 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 Southern i.e., Southern and Affiliated Managers go up and down completely randomly.
Pair Corralation between Southern and Affiliated Managers
Given the investment horizon of 90 days Southern Co is expected to under-perform the Affiliated Managers. But the stock apears to be less risky and, when comparing its historical volatility, Southern Co is 1.16 times less risky than Affiliated Managers. The stock trades about -0.19 of its potential returns per unit of risk. The Affiliated Managers Group, is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,654 in Affiliated Managers Group, on November 28, 2024 and sell it today you would lose (3.00) from holding Affiliated Managers Group, or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Co vs. Affiliated Managers Group,
Performance |
| Timeline |
| Southern |
| Affiliated Managers |
Southern and Affiliated Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern and Affiliated Managers
The main advantage of trading using opposite Southern and Affiliated Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern 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.| Southern vs. Southern Co | Southern vs. Southern Company Series | Southern vs. ATT Inc | Southern vs. Aegon Funding |
| Affiliated Managers vs. Affiliated Managers Group, | Affiliated Managers vs. Southern Company Series | Affiliated Managers vs. Affiliated Managers Group | Affiliated Managers vs. Southern Co |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |