Correlation Between Allianz Technology and Target Corp

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

By analyzing existing cross correlation between Allianz Technology Trust and Target Corp, you can compare the effects of market volatilities on Allianz Technology and Target Corp 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 Technology with a short position of Target Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianz Technology and Target Corp.

Diversification Opportunities for Allianz Technology and Target Corp

0.72

Correlation Coefficient

Allianz Technology  Target Corp

Poor diversification

The 3 months correlation between Allianz and Target is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Allianz Technology Trust and Target Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Corp and Allianz Technology 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 Technology Trust are associated (or correlated) with Target Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Corp has no effect on the direction of Allianz Technology i.e., Allianz Technology and Target Corp go up and down completely randomly.

Pair Corralation between Allianz Technology and Target Corp

Assuming the 90 days trading horizon Allianz Technology Trust is expected to generate 1.12 times more return on investment than Target Corp. However, Allianz Technology is 1.12 times more volatile than Target Corp. It trades about -0.09 of its potential returns per unit of risk. Target Corp is currently generating about -0.2 per unit of risk. If you would invest  42,200  in Allianz Technology Trust on December 23, 2024 and sell it today you would lose (4,750) from holding Allianz Technology Trust or give up 11.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Allianz Technology Trust  vs.  Target Corp

Allianz Technology Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allianz Technology Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Target Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Target Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Allianz Technology and Target Corp

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

The idea behind Allianz Technology Trust and Target Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.