Correlation Between FT Cboe and AllianzIM Large

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

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

Diversification Opportunities for FT Cboe and AllianzIM Large

0.92

Correlation Coefficient

FT Cboe  AllianzIM Large

Almost no diversification

The 3 months correlation between BUFD and AllianzIM is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and AllianzIM Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianzIM Large Cap and FT Cboe 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 FT Cboe Vest are associated (or correlated) with AllianzIM Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AllianzIM Large Cap has no effect on the direction of FT Cboe i.e., FT Cboe and AllianzIM Large go up and down completely randomly.

Pair Corralation between FT Cboe and AllianzIM Large

Given the investment horizon of 90 days FT Cboe Vest is expected to generate 0.64 times more return on investment than AllianzIM Large. However, FT Cboe Vest is 1.56 times less risky than AllianzIM Large. It trades about -0.05 of its potential returns per unit of risk. AllianzIM Large Cap is currently generating about -0.09 per unit of risk. If you would invest  2,555  in FT Cboe Vest on December 29, 2024 and sell it today you would lose (43.00) from holding FT Cboe Vest or give up 1.68% of portfolio value over 90 days.

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

FT Cboe Vest  vs.  AllianzIM Large Cap

FT Cboe Vest

Risk-Adjusted Performance

Very Weak

Over the last 90 days FT Cboe Vest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, FT Cboe is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 comparatively stable basic indicators, AllianzIM Large is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FT Cboe and AllianzIM Large

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

The idea behind FT Cboe Vest and AllianzIM Large Cap 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.