Correlation Between Affiliated Managers and Carlyle

Can any of the company-specific risk be diversified away by investing in both Affiliated Managers and Carlyle 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 Carlyle 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 The Carlyle Group, you can compare the effects of market volatilities on Affiliated Managers and Carlyle 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 Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Managers and Carlyle.

Diversification Opportunities for Affiliated Managers and Carlyle

0.84

Correlation Coefficient

Affiliated Managers  Carlyle

Very poor diversification

The 3 months correlation between Affiliated and Carlyle is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group, and The Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group 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 Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and Carlyle go up and down completely randomly.

Pair Corralation between Affiliated Managers and Carlyle

Given the investment horizon of 90 days Affiliated Managers Group, is expected to under-perform the Carlyle. But the stock apears to be less risky and, when comparing its historical volatility, Affiliated Managers Group, is 1.05 times less risky than Carlyle. The stock trades about -0.16 of its potential returns per unit of risk. The The Carlyle Group is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  1,972  in The Carlyle Group on September 26, 2024 and sell it today you would lose (198.00) from holding The Carlyle Group or give up 10.04% of portfolio value over 90 days.

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

Affiliated Managers Group,  vs.  The Carlyle Group

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 weak 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.

Carlyle Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Affiliated Managers and Carlyle

The main advantage of trading using opposite Affiliated Managers and Carlyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Managers position performs unexpectedly, Carlyle 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 Carlyle will offset losses from the drop in Carlyle's long position.

The idea behind Affiliated Managers Group, and The Carlyle 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.