Correlation Between Affiliated Managers and LATAM Airlines
Can any of the company-specific risk be diversified away by investing in both Affiliated Managers and LATAM Airlines 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 LATAM Airlines 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 LATAM Airlines Group, you can compare the effects of market volatilities on Affiliated Managers and LATAM Airlines 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 LATAM Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Managers and LATAM Airlines.
Diversification Opportunities for Affiliated Managers and LATAM Airlines
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Affiliated and LATAM is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group and LATAM Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LATAM Airlines 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 LATAM Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LATAM Airlines Group has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and LATAM Airlines go up and down completely randomly.
Pair Corralation between Affiliated Managers and LATAM Airlines
Considering the 90-day investment horizon Affiliated Managers Group is expected to generate 0.87 times more return on investment than LATAM Airlines. However, Affiliated Managers Group is 1.15 times less risky than LATAM Airlines. It trades about 0.15 of its potential returns per unit of risk. LATAM Airlines Group is currently generating about 0.03 per unit of risk. If you would invest 23,118 in Affiliated Managers Group on September 8, 2025 and sell it today you would earn a total of 4,201 from holding Affiliated Managers Group or generate 18.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affiliated Managers Group vs. LATAM Airlines Group
Performance |
| Timeline |
| Affiliated Managers |
| LATAM Airlines Group |
Affiliated Managers and LATAM Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affiliated Managers and LATAM Airlines
The main advantage of trading using opposite Affiliated Managers and LATAM Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Managers position performs unexpectedly, LATAM Airlines 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 LATAM Airlines will offset losses from the drop in LATAM Airlines' long position.| Affiliated Managers vs. Grupo Carso SAB | Affiliated Managers vs. CARsgen Therapeutics Holdings | Affiliated Managers vs. Ecoloclean Industrs | Affiliated Managers vs. Ultra Clean Holdings |
| LATAM Airlines vs. Ainsworth Game Technology | LATAM Airlines vs. Asure Software | LATAM Airlines vs. Infinite Technology Corp | LATAM Airlines vs. Datatec Limited |
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 the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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