Correlation Between Allianz Technology and Applied Materials

Can any of the company-specific risk be diversified away by investing in both Allianz Technology and Applied Materials 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 Applied Materials 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 Applied Materials, you can compare the effects of market volatilities on Allianz Technology and Applied Materials 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 Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianz Technology and Applied Materials.

Diversification Opportunities for Allianz Technology and Applied Materials

-0.71

Correlation Coefficient

Allianz Technology  Applied Materials

Pay attention - limited upside

The 3 months correlation between Allianz and Applied is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Allianz Technology Trust and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Allianz Technology i.e., Allianz Technology and Applied Materials go up and down completely randomly.

Pair Corralation between Allianz Technology and Applied Materials

Assuming the 90 days trading horizon Allianz Technology Trust is expected to generate 0.5 times more return on investment than Applied Materials. However, Allianz Technology Trust is 2.01 times less risky than Applied Materials. It trades about 0.15 of its potential returns per unit of risk. Applied Materials is currently generating about -0.08 per unit of risk. If you would invest  37,250  in Allianz Technology Trust on October 11, 2024 and sell it today you would earn a total of  4,700  from holding Allianz Technology Trust or generate 12.62% return on investment over 90 days.

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

Allianz Technology Trust  vs.  Applied Materials

Allianz Technology Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz Technology Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Allianz Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Applied Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied Materials 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 February 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 Applied Materials

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

The idea behind Allianz Technology Trust and Applied Materials 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 Stocks Directory module to find actively traded stocks across global markets.