Correlation Between Buffalo International and Manning Napier

Can any of the company-specific risk be diversified away by investing in both Buffalo International and Manning Napier 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 Buffalo International and Manning Napier into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Buffalo International and Manning Napier Overseas, you can compare the effects of market volatilities on Buffalo International and Manning Napier 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 Buffalo International with a short position of Manning Napier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buffalo International and Manning Napier.

Diversification Opportunities for Buffalo International and Manning Napier

0.97

Correlation Coefficient

Buffalo International  Manning Napier

Almost no diversification

The 3 months correlation between Buffalo and Manning is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Buffalo International and Manning Napier Overseas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manning Napier Overseas and Buffalo International 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 Buffalo International are associated (or correlated) with Manning Napier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manning Napier Overseas has no effect on the direction of Buffalo International i.e., Buffalo International and Manning Napier go up and down completely randomly.

Pair Corralation between Buffalo International and Manning Napier

Assuming the 90 days horizon Buffalo International is expected to under-perform the Manning Napier. In addition to that, Buffalo International is 1.02 times more volatile than Manning Napier Overseas. It trades about -0.21 of its total potential returns per unit of risk. Manning Napier Overseas is currently generating about -0.16 per unit of volatility. If you would invest  3,331  in Manning Napier Overseas on September 24, 2024 and sell it today you would lose (89.00) from holding Manning Napier Overseas or give up 2.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Buffalo International  vs.  Manning Napier Overseas

Buffalo International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Buffalo International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Manning Napier Overseas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manning Napier Overseas has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Buffalo International and Manning Napier

The main advantage of trading using opposite Buffalo International and Manning Napier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buffalo International position performs unexpectedly, Manning Napier 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 Manning Napier will offset losses from the drop in Manning Napier's long position.

The idea behind Buffalo International and Manning Napier Overseas 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.