Correlation Between Allianz Clean and Barings Global

Can any of the company-specific risk be diversified away by investing in both Allianz Clean and Barings Global 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 Allianz Clean and Barings Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allianz Clean Planet and Barings Global Umbrella, you can compare the effects of market volatilities on Allianz Clean and Barings Global 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 Allianz Clean with a short position of Barings Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianz Clean and Barings Global.

Diversification Opportunities for Allianz Clean and Barings Global

0.87

Correlation Coefficient

Allianz Clean  Barings Global

Very poor diversification

The 3 months correlation between Allianz and Barings is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Allianz Clean Planet and Barings Global Umbrella in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Global Umbrella and Allianz Clean 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 Allianz Clean Planet are associated (or correlated) with Barings Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Global Umbrella has no effect on the direction of Allianz Clean i.e., Allianz Clean and Barings Global go up and down completely randomly.

Pair Corralation between Allianz Clean and Barings Global

Assuming the 90 days trading horizon Allianz Clean Planet is expected to under-perform the Barings Global. In addition to that, Allianz Clean is 1.5 times more volatile than Barings Global Umbrella. It trades about -0.08 of its total potential returns per unit of risk. Barings Global Umbrella is currently generating about -0.06 per unit of volatility. If you would invest  738.00  in Barings Global Umbrella on December 28, 2024 and sell it today you would lose (15.00) from holding Barings Global Umbrella or give up 2.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Allianz Clean Planet  vs.  Barings Global Umbrella

Allianz Clean Planet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allianz Clean Planet has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent basic indicators, Allianz Clean is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Barings Global Umbrella

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barings Global Umbrella has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Barings Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allianz Clean and Barings Global

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

The idea behind Allianz Clean Planet and Barings Global Umbrella 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.