Correlation Between Affiliated Managers and Boeing

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Can any of the company-specific risk be diversified away by investing in both Affiliated Managers and Boeing 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 Affiliated Managers and Boeing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affiliated Managers Group and Boeing Company, you can compare the effects of market volatilities on Affiliated Managers and Boeing 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 Affiliated Managers with a short position of Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Managers and Boeing.

Diversification Opportunities for Affiliated Managers and Boeing

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Affiliated and Boeing is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group and Boeing Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing Company and Affiliated Managers 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 Affiliated Managers Group are associated (or correlated) with Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing Company has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and Boeing go up and down completely randomly.

Pair Corralation between Affiliated Managers and Boeing

Considering the 90-day investment horizon Affiliated Managers Group is expected to generate 0.97 times more return on investment than Boeing. However, Affiliated Managers Group is 1.03 times less risky than Boeing. It trades about 0.05 of its potential returns per unit of risk. Boeing Company is currently generating about -0.01 per unit of risk. If you would invest  9,545  in Affiliated Managers Group on August 29, 2022 and sell it today you would earn a total of  6,143  from holding Affiliated Managers Group or generate 64.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Affiliated Managers Group  vs.  Boeing Company

 Performance (%) 
       Timeline  
Affiliated Managers 
Affiliated Performance
9 of 100
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 unfluctuating primary indicators, Affiliated Managers exhibited solid returns over the last few months and may actually be approaching a breakup point.

Affiliated Price Channel

Boeing Company 
Boeing Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Boeing Company are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Boeing may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Boeing Price Channel

Affiliated Managers and Boeing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Affiliated Managers and Boeing

The main advantage of trading using opposite Affiliated Managers and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Managers position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.
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The idea behind Affiliated Managers Group and Boeing Company 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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Check out your portfolio center. 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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