Correlation Between Globe Life and Affiliated Managers

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

By analyzing existing cross correlation between Globe Life 425 and Affiliated Managers Group,, you can compare the effects of market volatilities on Globe Life 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 Globe Life with a short position of Affiliated Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Life and Affiliated Managers.

Diversification Opportunities for Globe Life and Affiliated Managers

0.9

Correlation Coefficient

Globe Life  Affiliated Managers

Almost no diversification

The 3 months correlation between Globe and Affiliated is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Globe Life 425 and Affiliated Managers Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers and Globe Life 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 Globe Life 425 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 Globe Life i.e., Globe Life and Affiliated Managers go up and down completely randomly.

Pair Corralation between Globe Life and Affiliated Managers

Assuming the 90 days horizon Globe Life 425 is expected to under-perform the Affiliated Managers. In addition to that, Globe Life is 1.22 times more volatile than Affiliated Managers Group,. It trades about -0.11 of its total potential returns per unit of risk. Affiliated Managers Group, is currently generating about -0.13 per unit of volatility. If you would invest  2,041  in Affiliated Managers Group, on September 21, 2024 and sell it today you would lose (166.00) from holding Affiliated Managers Group, or give up 8.13% of portfolio value over 90 days.

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

Globe Life 425  vs.  Affiliated Managers Group,

Globe Life 425

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globe Life 425 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Preferred 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.

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. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Globe Life and Affiliated Managers

The main advantage of trading using opposite Globe Life and Affiliated Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Life 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 Globe Life 425 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 CEOs Directory module to screen CEOs from public companies around the world.