Correlation Between International Equity and Allianzgi Technology

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

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

Diversification Opportunities for International Equity and Allianzgi Technology

-0.64

Correlation Coefficient

International Equity  Allianzgi Technology

Excellent diversification

The 3 months correlation between International and Allianzgi is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding International Equity Index and Allianzgi Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Technology and International Equity 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 International Equity Index 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 International Equity i.e., International Equity and Allianzgi Technology go up and down completely randomly.

Pair Corralation between International Equity and Allianzgi Technology

Assuming the 90 days horizon International Equity Index is expected to under-perform the Allianzgi Technology. But the mutual fund apears to be less risky and, when comparing its historical volatility, International Equity Index is 1.45 times less risky than Allianzgi Technology. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Allianzgi Technology Fund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  8,352  in Allianzgi Technology Fund on September 21, 2024 and sell it today you would earn a total of  1,227  from holding Allianzgi Technology Fund or generate 14.69% return on investment over 90 days.

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

International Equity Index  vs.  Allianzgi Technology Fund

International Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Equity Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Allianzgi Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Technology Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Allianzgi Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Equity and Allianzgi Technology

The main advantage of trading using opposite International Equity and Allianzgi Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Equity 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 International Equity Index 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..