Correlation Between ATT and Affiliated Managers

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

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

Diversification Opportunities for ATT and Affiliated Managers

0.88

Correlation Coefficient

ATT  Affiliated Managers

Very poor diversification

The 3 months correlation between ATT and Affiliated is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Affiliated Managers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers and ATT 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 ATT Inc 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 ATT i.e., ATT and Affiliated Managers go up and down completely randomly.

Pair Corralation between ATT and Affiliated Managers

Considering the 90-day investment horizon ATT is expected to generate 1.29 times less return on investment than Affiliated Managers. But when comparing it to its historical volatility, ATT Inc is 1.03 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 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,014  in Affiliated Managers Group on May 5, 2025 and sell it today you would earn a total of  102.00  from holding Affiliated Managers Group or generate 5.06% return on investment over 90 days.

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

ATT Inc  vs.  Affiliated Managers Group

ATT Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, ATT is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Affiliated Managers

Risk-Adjusted Performance

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. Even with relatively invariable technical and fundamental indicators, Affiliated Managers is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ATT and Affiliated Managers

The main advantage of trading using opposite ATT and Affiliated Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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 ATT Inc 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.