Correlation Between Affiliated Managers and United States

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

Diversification Opportunities for Affiliated Managers and United States

-0.65

Correlation Coefficient

Affiliated Managers  United States

Excellent diversification

The 3 months correlation between Affiliated and United is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group, and United States Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Cellular 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Cellular has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and United States go up and down completely randomly.

Pair Corralation between Affiliated Managers and United States

Given the investment horizon of 90 days Affiliated Managers Group, is expected to under-perform the United States. In addition to that, Affiliated Managers is 2.27 times more volatile than United States Cellular. It trades about -0.18 of its total potential returns per unit of risk. United States Cellular is currently generating about -0.11 per unit of volatility. If you would invest  2,251  in United States Cellular on September 24, 2024 and sell it today you would lose (26.00) from holding United States Cellular or give up 1.16% of portfolio value over 90 days.

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

Affiliated Managers Group,  vs.  United States Cellular

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. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

United States Cellular

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United States Cellular are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, United States is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Affiliated Managers and United States

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

The idea behind Affiliated Managers Group, and United States Cellular 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.