Correlation Between YHN Acquisition and Affiliated Managers

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

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

Diversification Opportunities for YHN Acquisition and Affiliated Managers

-0.63

Correlation Coefficient

YHN Acquisition  Affiliated Managers

Excellent diversification

The 3 months correlation between YHN and Affiliated is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding YHN Acquisition I and Affiliated Managers Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers and YHN Acquisition 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 YHN Acquisition I 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 YHN Acquisition i.e., YHN Acquisition and Affiliated Managers go up and down completely randomly.

Pair Corralation between YHN Acquisition and Affiliated Managers

Assuming the 90 days horizon YHN Acquisition is expected to generate 3.91 times less return on investment than Affiliated Managers. But when comparing it to its historical volatility, YHN Acquisition I is 1.89 times less risky than Affiliated Managers. It trades about 0.03 of its potential returns per unit of risk. Affiliated Managers Group, is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,394  in Affiliated Managers Group, on September 24, 2024 and sell it today you would earn a total of  235.00  from holding Affiliated Managers Group, or generate 16.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	25.17%
Values	Daily Returns

YHN Acquisition I  vs.  Affiliated Managers Group,

YHN Acquisition I

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in YHN Acquisition I are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, YHN Acquisition is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with YHN Acquisition and Affiliated Managers

The main advantage of trading using opposite YHN Acquisition and Affiliated Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YHN Acquisition 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 YHN Acquisition I 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.