Correlation Between Manning Napier and Buffalo International

Can any of the company-specific risk be diversified away by investing in both Manning Napier and Buffalo International 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 Manning Napier and Buffalo International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Manning Napier Overseas and Buffalo International, you can compare the effects of market volatilities on Manning Napier and Buffalo International 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 Manning Napier with a short position of Buffalo International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manning Napier and Buffalo International.

Diversification Opportunities for Manning Napier and Buffalo International

0.97

Correlation Coefficient

Manning Napier  Buffalo International

Almost no diversification

The 3 months correlation between Manning and Buffalo is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Manning Napier Overseas and Buffalo International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buffalo International and Manning Napier 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 Manning Napier Overseas are associated (or correlated) with Buffalo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buffalo International has no effect on the direction of Manning Napier i.e., Manning Napier and Buffalo International go up and down completely randomly.

Pair Corralation between Manning Napier and Buffalo International

Assuming the 90 days horizon Manning Napier Overseas is expected to generate 0.97 times more return on investment than Buffalo International. However, Manning Napier Overseas is 1.03 times less risky than Buffalo International. It trades about -0.15 of its potential returns per unit of risk. Buffalo International is currently generating about -0.17 per unit of risk. If you would invest  3,331  in Manning Napier Overseas on September 25, 2024 and sell it today you would lose (89.00) from holding Manning Napier Overseas or give up 2.67% of portfolio value over 90 days.

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

Manning Napier Overseas  vs.  Buffalo International

Manning Napier Overseas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manning Napier Overseas has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Buffalo International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Buffalo International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Manning Napier and Buffalo International

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

The idea behind Manning Napier Overseas and Buffalo International 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.