Correlation Between Affiliated Managers and Maiden Holdings

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

Diversification Opportunities for Affiliated Managers and Maiden Holdings

0.6

Correlation Coefficient

Affiliated Managers  Maiden Holdings

Poor diversification

The 3 months correlation between Affiliated and Maiden is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group and Maiden Holdings North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings North 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 Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings North has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and Maiden Holdings go up and down completely randomly.

Pair Corralation between Affiliated Managers and Maiden Holdings

Considering the 90-day investment horizon Affiliated Managers Group is expected to under-perform the Maiden Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Affiliated Managers Group is 2.74 times less risky than Maiden Holdings. The stock trades about -0.2 of its potential returns per unit of risk. The Maiden Holdings North is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,703  in Maiden Holdings North on October 6, 2024 and sell it today you would earn a total of  69.00  from holding Maiden Holdings North or generate 4.05% return on investment over 90 days.

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

Affiliated Managers Group  vs.  Maiden Holdings North

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.

Maiden Holdings North

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maiden Holdings North are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Maiden Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Affiliated Managers and Maiden Holdings

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

The idea behind Affiliated Managers Group and Maiden Holdings North 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.