Correlation Between Affiliated Managers and AB Disruptors

Can any of the company-specific risk be diversified away by investing in both Affiliated Managers and AB Disruptors 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 AB Disruptors 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 AB Disruptors ETF, you can compare the effects of market volatilities on Affiliated Managers and AB Disruptors 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 AB Disruptors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Managers and AB Disruptors.

Diversification Opportunities for Affiliated Managers and AB Disruptors

-0.66

Correlation Coefficient

Affiliated Managers  AB Disruptors

Excellent diversification

The 3 months correlation between Affiliated and FWD is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group and AB Disruptors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Disruptors ETF 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 AB Disruptors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Disruptors ETF has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and AB Disruptors go up and down completely randomly.

Pair Corralation between Affiliated Managers and AB Disruptors

Considering the 90-day investment horizon Affiliated Managers Group is expected to generate 0.48 times more return on investment than AB Disruptors. However, Affiliated Managers Group is 2.09 times less risky than AB Disruptors. It trades about -0.13 of its potential returns per unit of risk. AB Disruptors ETF is currently generating about -0.07 per unit of risk. If you would invest  2,301  in Affiliated Managers Group on October 10, 2024 and sell it today you would lose (51.00) from holding Affiliated Managers Group or give up 2.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Affiliated Managers Group  vs.  AB Disruptors ETF

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.

AB Disruptors ETF

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AB Disruptors ETF are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, AB Disruptors is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Affiliated Managers and AB Disruptors

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

The idea behind Affiliated Managers Group and AB Disruptors ETF 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.