Correlation Between Vornado Realty and Affiliated Managers

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

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

Diversification Opportunities for Vornado Realty and Affiliated Managers

0.78

Correlation Coefficient

Vornado Realty  Affiliated Managers

Poor diversification

The 3 months correlation between Vornado and Affiliated is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vornado Realty Trust and Affiliated Managers Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers and Vornado Realty 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 Vornado Realty Trust 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 Vornado Realty i.e., Vornado Realty and Affiliated Managers go up and down completely randomly.

Pair Corralation between Vornado Realty and Affiliated Managers

Assuming the 90 days trading horizon Vornado Realty Trust is expected to generate 0.87 times more return on investment than Affiliated Managers. However, Vornado Realty Trust is 1.15 times less risky than Affiliated Managers. It trades about -0.12 of its potential returns per unit of risk. Affiliated Managers Group, is currently generating about -0.18 per unit of risk. If you would invest  1,862  in Vornado Realty Trust on September 26, 2024 and sell it today you would lose (110.00) from holding Vornado Realty Trust or give up 5.91% of portfolio value over 90 days.

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

Vornado Realty Trust  vs.  Affiliated Managers Group,

Vornado Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vornado Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Vornado Realty is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

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. In spite of latest weak performance, the 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.

Pair Trading with Vornado Realty and Affiliated Managers

The main advantage of trading using opposite Vornado Realty and Affiliated Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vornado Realty 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 Vornado Realty Trust 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.