Correlation Between Magic Empire and Affiliated Managers

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

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

Diversification Opportunities for Magic Empire and Affiliated Managers

-0.49

Correlation Coefficient

Magic Empire  Affiliated Managers

Very good diversification

The 3 months correlation between Magic and Affiliated is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Magic Empire Global and Affiliated Managers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers and Magic Empire 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 Magic Empire Global 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 Magic Empire i.e., Magic Empire and Affiliated Managers go up and down completely randomly.

Pair Corralation between Magic Empire and Affiliated Managers

Given the investment horizon of 90 days Magic Empire Global is expected to under-perform the Affiliated Managers. In addition to that, Magic Empire is 4.29 times more volatile than Affiliated Managers Group. It trades about -0.01 of its total potential returns per unit of risk. Affiliated Managers Group is currently generating about 0.04 per unit of volatility. If you would invest  15,613  in Affiliated Managers Group on February 20, 2024 and sell it today you would earn a total of  321.00  from holding Affiliated Managers Group or generate 2.06% return on investment over 90 days.

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

Magic Empire Global  vs.  Affiliated Managers Group

Magic Empire Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magic Empire Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Magic Empire is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Affiliated Managers

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Affiliated Managers Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Affiliated Managers is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Magic Empire and Affiliated Managers

The main advantage of trading using opposite Magic Empire and Affiliated Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Empire 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 Magic Empire Global 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..