Correlation Between AllianzIM Large and Vulcan Value

Can any of the company-specific risk be diversified away by investing in both AllianzIM Large and Vulcan Value 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 AllianzIM Large and Vulcan Value into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AllianzIM Large Cap and Vulcan Value Partners, you can compare the effects of market volatilities on AllianzIM Large and Vulcan Value 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 AllianzIM Large with a short position of Vulcan Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of AllianzIM Large and Vulcan Value.

Diversification Opportunities for AllianzIM Large and Vulcan Value

0.83

Correlation Coefficient

AllianzIM Large  Vulcan Value

Very poor diversification

The 3 months correlation between AllianzIM and Vulcan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding AllianzIM Large Cap and Vulcan Value Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Value Partners and AllianzIM Large 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 AllianzIM Large Cap are associated (or correlated) with Vulcan Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Value Partners has no effect on the direction of AllianzIM Large i.e., AllianzIM Large and Vulcan Value go up and down completely randomly.

Pair Corralation between AllianzIM Large and Vulcan Value

Given the investment horizon of 90 days AllianzIM Large Cap is expected to under-perform the Vulcan Value. But the etf apears to be less risky and, when comparing its historical volatility, AllianzIM Large Cap is 1.52 times less risky than Vulcan Value. The etf trades about -0.07 of its potential returns per unit of risk. The Vulcan Value Partners is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,187  in Vulcan Value Partners on December 29, 2024 and sell it today you would lose (23.00) from holding Vulcan Value Partners or give up 1.94% of portfolio value over 90 days.

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

AllianzIM Large Cap  vs.  Vulcan Value Partners

AllianzIM Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days AllianzIM Large Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, AllianzIM Large is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Vulcan Value Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vulcan Value Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Vulcan Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AllianzIM Large and Vulcan Value

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

The idea behind AllianzIM Large Cap and Vulcan Value Partners 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.