Correlation Between AECOM TECHNOLOGY and ALLIANZ TECHNOTRLS

Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY and ALLIANZ TECHNOTRLS 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 AECOM TECHNOLOGY and ALLIANZ TECHNOTRLS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AECOM TECHNOLOGY and ALLIANZ TECHNOTRLS 025, you can compare the effects of market volatilities on AECOM TECHNOLOGY and ALLIANZ TECHNOTRLS 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 AECOM TECHNOLOGY with a short position of ALLIANZ TECHNOTRLS. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and ALLIANZ TECHNOTRLS.

Diversification Opportunities for AECOM TECHNOLOGY and ALLIANZ TECHNOTRLS

0.83

Correlation Coefficient

AECOM TECHNOLOGY  ALLIANZ TECHNOTRLS

Very poor diversification

The 3 months correlation between AECOM and ALLIANZ is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and ALLIANZ TECHNOTRLS 025 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLIANZ TECHNOTRLS 025 and AECOM 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 AECOM TECHNOLOGY are associated (or correlated) with ALLIANZ TECHNOTRLS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLIANZ TECHNOTRLS 025 has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and ALLIANZ TECHNOTRLS go up and down completely randomly.

Pair Corralation between AECOM TECHNOLOGY and ALLIANZ TECHNOTRLS

Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to under-perform the ALLIANZ TECHNOTRLS. But the stock apears to be less risky and, when comparing its historical volatility, AECOM TECHNOLOGY is 1.74 times less risky than ALLIANZ TECHNOTRLS. The stock trades about -0.36 of its potential returns per unit of risk. The ALLIANZ TECHNOTRLS 025 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  484.00  in ALLIANZ TECHNOTRLS 025 on October 4, 2024 and sell it today you would earn a total of  14.00  from holding ALLIANZ TECHNOTRLS 025 or generate 2.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.74%
Values	Daily Returns

AECOM TECHNOLOGY  vs.  ALLIANZ TECHNOTRLS 025

AECOM TECHNOLOGY

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AECOM TECHNOLOGY are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, AECOM TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ALLIANZ TECHNOTRLS 025

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ALLIANZ TECHNOTRLS 025 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ALLIANZ TECHNOTRLS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AECOM TECHNOLOGY and ALLIANZ TECHNOTRLS

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

The idea behind AECOM TECHNOLOGY and ALLIANZ TECHNOTRLS 025 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.