Correlation Between Affiliated Managers and Principal

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

Diversification Opportunities for Affiliated Managers and Principal

-0.81

Correlation Coefficient

Affiliated Managers  Principal

Pay attention - limited upside

The 3 months correlation between Affiliated and Principal is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group and Principal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal 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 Principal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and Principal go up and down completely randomly.

Pair Corralation between Affiliated Managers and Principal

If you would invest  4,404  in Principal on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Principal or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.61%
Values	Daily Returns

Affiliated Managers Group  vs.  Principal

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.

Principal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Principal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Principal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Affiliated Managers and Principal

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

The idea behind Affiliated Managers Group and Principal 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.