Correlation Between Polar Capital and Allianz Technology

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

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

Diversification Opportunities for Polar Capital and Allianz Technology

0.99

Correlation Coefficient

Polar Capital  Allianz Technology

No risk reduction

The 3 months correlation between Polar and Allianz is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Allianz Technology Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz Technology Trust and Polar Capital 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 Polar Capital Technology are associated (or correlated) with Allianz Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz Technology Trust has no effect on the direction of Polar Capital i.e., Polar Capital and Allianz Technology go up and down completely randomly.

Pair Corralation between Polar Capital and Allianz Technology

Assuming the 90 days trading horizon Polar Capital Technology is expected to under-perform the Allianz Technology. But the stock apears to be less risky and, when comparing its historical volatility, Polar Capital Technology is 1.05 times less risky than Allianz Technology. The stock trades about -0.12 of its potential returns per unit of risk. The Allianz Technology Trust is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  41,900  in Allianz Technology Trust on December 31, 2024 and sell it today you would lose (5,750) from holding Allianz Technology Trust or give up 13.72% of portfolio value over 90 days.

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

Polar Capital Technology  vs.  Allianz Technology Trust

Polar Capital Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polar Capital Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Polar Capital and Allianz Technology

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

The idea behind Polar Capital Technology and Allianz Technology Trust 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.