Correlation Between Broad Capital and Affiliated Managers

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

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

Diversification Opportunities for Broad Capital and Affiliated Managers

-0.8

Correlation Coefficient

Broad Capital  Affiliated Managers

Pay attention - limited upside

The 3 months correlation between Broad and Affiliated is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and Affiliated Managers Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers and Broad Capital 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 Broad Capital Acquisition 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 Broad Capital i.e., Broad Capital and Affiliated Managers go up and down completely randomly.

Pair Corralation between Broad Capital and Affiliated Managers

Assuming the 90 days horizon Broad Capital is expected to generate 5.93 times less return on investment than Affiliated Managers. But when comparing it to its historical volatility, Broad Capital Acquisition is 1.96 times less risky than Affiliated Managers. It trades about 0.1 of its potential returns per unit of risk. Affiliated Managers Group, is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,759  in Affiliated Managers Group, on July 16, 2024 and sell it today you would earn a total of  56.00  from holding Affiliated Managers Group, or generate 3.18% return on investment over 90 days.

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

Broad Capital Acquisition  vs.  Affiliated Managers Group,

Broad Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broad Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Broad Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Affiliated Managers

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Affiliated Managers Group, are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Affiliated Managers is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Broad Capital and Affiliated Managers

The main advantage of trading using opposite Broad Capital and Affiliated Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broad Capital 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 Broad Capital Acquisition 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.