Correlation Between Smallcap Growth and Allianzgi Diversified

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

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

Diversification Opportunities for Smallcap Growth and Allianzgi Diversified

0.93

Correlation Coefficient

Smallcap Growth  Allianzgi Diversified

Almost no diversification

The 3 months correlation between Smallcap and Allianzgi is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Allianzgi Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Diversified and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Allianzgi Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Diversified has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Allianzgi Diversified go up and down completely randomly.

Pair Corralation between Smallcap Growth and Allianzgi Diversified

Assuming the 90 days horizon Smallcap Growth Fund is expected to under-perform the Allianzgi Diversified. In addition to that, Smallcap Growth is 1.51 times more volatile than Allianzgi Diversified Income. It trades about -0.11 of its total potential returns per unit of risk. Allianzgi Diversified Income is currently generating about -0.12 per unit of volatility. If you would invest  2,184  in Allianzgi Diversified Income on December 27, 2024 and sell it today you would lose (146.00) from holding Allianzgi Diversified Income or give up 6.68% of portfolio value over 90 days.

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

Smallcap Growth Fund  vs.  Allianzgi Diversified Income

Smallcap Growth

Risk-Adjusted Performance

Very Weak

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

Allianzgi Diversified

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allianzgi Diversified Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with Smallcap Growth and Allianzgi Diversified

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

The idea behind Smallcap Growth Fund and Allianzgi Diversified Income 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.