Correlation Between Affiliated Managers and DBA Sempra

Can any of the company-specific risk be diversified away by investing in both Affiliated Managers and DBA Sempra 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 DBA Sempra 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 DBA Sempra 5750, you can compare the effects of market volatilities on Affiliated Managers and DBA Sempra 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 DBA Sempra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Managers and DBA Sempra.

Diversification Opportunities for Affiliated Managers and DBA Sempra

0.5

Correlation Coefficient

Affiliated Managers  DBA Sempra

Very weak diversification

The 3 months correlation between Affiliated and DBA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group and DBA Sempra 5750 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBA Sempra 5750 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 DBA Sempra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBA Sempra 5750 has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and DBA Sempra go up and down completely randomly.

Pair Corralation between Affiliated Managers and DBA Sempra

Considering the 90-day investment horizon Affiliated Managers Group is expected to generate 0.71 times more return on investment than DBA Sempra. However, Affiliated Managers Group is 1.42 times less risky than DBA Sempra. It trades about -0.23 of its potential returns per unit of risk. DBA Sempra 5750 is currently generating about -0.38 per unit of risk. If you would invest  2,349  in Affiliated Managers Group on November 28, 2024 and sell it today you would lose (71.00) from holding Affiliated Managers Group or give up 3.02% of portfolio value over 90 days.

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

Affiliated Managers Group  vs.  DBA Sempra 5750

Affiliated Managers

Risk-Adjusted Performance

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 relatively invariable technical and fundamental indicators, Affiliated Managers is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

DBA Sempra 5750

Risk-Adjusted Performance

Very Weak

Over the last 90 days DBA Sempra 5750 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, DBA Sempra is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Affiliated Managers and DBA Sempra

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

The idea behind Affiliated Managers Group and DBA Sempra 5750 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.