Correlation Between Allianzgi Emerging and Ultraemerging Markets

Can any of the company-specific risk be diversified away by investing in both Allianzgi Emerging and Ultraemerging Markets 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 Allianzgi Emerging and Ultraemerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allianzgi Emerging Markets and Ultraemerging Markets Profund, you can compare the effects of market volatilities on Allianzgi Emerging and Ultraemerging Markets 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 Allianzgi Emerging with a short position of Ultraemerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianzgi Emerging and Ultraemerging Markets.

Diversification Opportunities for Allianzgi Emerging and Ultraemerging Markets

0.74

Correlation Coefficient

Allianzgi Emerging  Ultraemerging Markets

Poor diversification

The 3 months correlation between Allianzgi and Ultraemerging is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Emerging Markets and Ultraemerging Markets Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultraemerging Markets and Allianzgi Emerging 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 Allianzgi Emerging Markets are associated (or correlated) with Ultraemerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultraemerging Markets has no effect on the direction of Allianzgi Emerging i.e., Allianzgi Emerging and Ultraemerging Markets go up and down completely randomly.

Pair Corralation between Allianzgi Emerging and Ultraemerging Markets

Assuming the 90 days horizon Allianzgi Emerging Markets is expected to under-perform the Ultraemerging Markets. But the mutual fund apears to be less risky and, when comparing its historical volatility, Allianzgi Emerging Markets is 1.38 times less risky than Ultraemerging Markets. The mutual fund trades about -0.2 of its potential returns per unit of risk. The Ultraemerging Markets Profund is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  5,200  in Ultraemerging Markets Profund on October 6, 2024 and sell it today you would lose (371.00) from holding Ultraemerging Markets Profund or give up 7.13% of portfolio value over 90 days.

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

Allianzgi Emerging Markets  vs.  Ultraemerging Markets Profund

Allianzgi Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allianzgi Emerging Markets 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.

Ultraemerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultraemerging Markets Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Allianzgi Emerging and Ultraemerging Markets

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

The idea behind Allianzgi Emerging Markets and Ultraemerging Markets Profund 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.