Correlation Between Affiliated Managers and CNO Financial

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

Diversification Opportunities for Affiliated Managers and CNO Financial

0.9

Correlation Coefficient

Affiliated Managers  CNO Financial

Almost no diversification

The 3 months correlation between Affiliated and CNO is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group, and CNO Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNO Financial Group 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 CNO Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNO Financial Group has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and CNO Financial go up and down completely randomly.

Pair Corralation between Affiliated Managers and CNO Financial

Given the investment horizon of 90 days Affiliated Managers is expected to generate 3.14 times less return on investment than CNO Financial. But when comparing it to its historical volatility, Affiliated Managers Group, is 1.19 times less risky than CNO Financial. It trades about 0.01 of its potential returns per unit of risk. CNO Financial Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,564  in CNO Financial Group on October 10, 2024 and sell it today you would earn a total of  348.00  from holding CNO Financial Group or generate 22.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Affiliated Managers Group,  vs.  CNO Financial Group

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. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CNO Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNO Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Preferred 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.

Pair Trading with Affiliated Managers and CNO Financial

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

The idea behind Affiliated Managers Group, and CNO Financial Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.