Correlation Between Embrace Change and Affiliated Managers

Can any of the company-specific risk be diversified away by investing in both Embrace Change 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 Embrace Change and Affiliated Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Embrace Change Acquisition and Affiliated Managers Group, you can compare the effects of market volatilities on Embrace Change 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 Embrace Change with a short position of Affiliated Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Affiliated Managers.

Diversification Opportunities for Embrace Change and Affiliated Managers

0.18

Correlation Coefficient

Embrace Change  Affiliated Managers

Average diversification

The 3 months correlation between Embrace and Affiliated is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Affiliated Managers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers and Embrace Change 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 Embrace Change Acquisition 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 Embrace Change i.e., Embrace Change and Affiliated Managers go up and down completely randomly.

Pair Corralation between Embrace Change and Affiliated Managers

Assuming the 90 days horizon Embrace Change Acquisition is expected to generate 270.76 times more return on investment than Affiliated Managers. However, Embrace Change is 270.76 times more volatile than Affiliated Managers Group. It trades about 0.2 of its potential returns per unit of risk. Affiliated Managers Group is currently generating about 0.05 per unit of risk. If you would invest  12.00  in Embrace Change Acquisition on October 9, 2024 and sell it today you would lose (4.47) from holding Embrace Change Acquisition or give up 37.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	33.6%
Values	Daily Returns

Embrace Change Acquisition  vs.  Affiliated Managers Group

Embrace Change Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embrace Change Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Affiliated Managers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Affiliated Managers Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Embrace Change and Affiliated Managers

The main advantage of trading using opposite Embrace Change and Affiliated Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change 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 Embrace Change Acquisition 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.