Correlation Between Technology Portfolio and Allianzgi Technology

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

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

Diversification Opportunities for Technology Portfolio and Allianzgi Technology

0.72

Correlation Coefficient

Technology Portfolio  Allianzgi Technology

Poor diversification

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

Pair Corralation between Technology Portfolio and Allianzgi Technology

Assuming the 90 days horizon Technology Portfolio Technology is expected to under-perform the Allianzgi Technology. In addition to that, Technology Portfolio is 1.03 times more volatile than Allianzgi Technology Fund. It trades about -0.05 of its total potential returns per unit of risk. Allianzgi Technology Fund is currently generating about -0.05 per unit of volatility. If you would invest  9,094  in Allianzgi Technology Fund on December 2, 2024 and sell it today you would lose (487.00) from holding Allianzgi Technology Fund or give up 5.36% of portfolio value over 90 days.

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

Technology Portfolio Technolog  vs.  Allianzgi Technology Fund

Technology Portfolio

Risk-Adjusted Performance

Very Weak

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

Allianzgi Technology

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Technology Portfolio and Allianzgi Technology

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

The idea behind Technology Portfolio Technology and Allianzgi Technology Fund 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.