Correlation Between WisdomTree and Affiliated Managers

Can any of the company-specific risk be diversified away by investing in both WisdomTree and Affiliated Managers 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 WisdomTree and Affiliated Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WisdomTree and Affiliated Managers Group,, you can compare the effects of market volatilities on WisdomTree and Affiliated Managers 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 WisdomTree with a short position of Affiliated Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree and Affiliated Managers.

Diversification Opportunities for WisdomTree and Affiliated Managers

-0.05

Correlation Coefficient

WisdomTree  Affiliated Managers

Good diversification

The 3 months correlation between WisdomTree and Affiliated is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree and Affiliated Managers Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers and WisdomTree 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 WisdomTree are associated (or correlated) with Affiliated Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Managers has no effect on the direction of WisdomTree i.e., WisdomTree and Affiliated Managers go up and down completely randomly.

Pair Corralation between WisdomTree and Affiliated Managers

Allowing for the 90-day total investment horizon WisdomTree is expected to under-perform the Affiliated Managers. In addition to that, WisdomTree is 2.72 times more volatile than Affiliated Managers Group,. It trades about -0.13 of its total potential returns per unit of risk. Affiliated Managers Group, is currently generating about -0.02 per unit of volatility. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

WisdomTree  vs.  Affiliated Managers Group,

WisdomTree

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WisdomTree and Affiliated Managers

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

The idea behind WisdomTree and Affiliated Managers 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.