Correlation Between Affiliated Managers and Artisan Partners

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

Diversification Opportunities for Affiliated Managers and Artisan Partners

0.44

Correlation Coefficient

Affiliated Managers  Artisan Partners

Very weak diversification

The 3 months correlation between Affiliated and Artisan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group, and Artisan Partners Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Partners Asset 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 Artisan Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Partners Asset has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and Artisan Partners go up and down completely randomly.

Pair Corralation between Affiliated Managers and Artisan Partners

Given the investment horizon of 90 days Affiliated Managers Group, is expected to generate 0.34 times more return on investment than Artisan Partners. However, Affiliated Managers Group, is 2.93 times less risky than Artisan Partners. It trades about -0.02 of its potential returns per unit of risk. Artisan Partners Asset is currently generating about -0.05 per unit of risk. If you would invest  2,420  in Affiliated Managers Group, on December 30, 2024 and sell it today you would lose (19.00) from holding Affiliated Managers Group, or give up 0.79% 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.  Artisan Partners Asset

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. In spite of rather sound basic indicators, Affiliated Managers is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Artisan Partners Asset

Risk-Adjusted Performance

Very Weak

Over the last 90 days Artisan Partners Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Artisan Partners is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Affiliated Managers and Artisan Partners

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

The idea behind Affiliated Managers Group, and Artisan Partners Asset 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.