Correlation Between Allianzgi Technology and Vanguard Mega

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

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

Diversification Opportunities for Allianzgi Technology and Vanguard Mega

0.76

Correlation Coefficient

Allianzgi Technology  Vanguard Mega

Poor diversification

The 3 months correlation between Allianzgi and Vanguard is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Technology Fund and Vanguard Mega Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mega Cap and Allianzgi 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 Allianzgi Technology Fund are associated (or correlated) with Vanguard Mega. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mega Cap has no effect on the direction of Allianzgi Technology i.e., Allianzgi Technology and Vanguard Mega go up and down completely randomly.

Pair Corralation between Allianzgi Technology and Vanguard Mega

Assuming the 90 days horizon Allianzgi Technology Fund is expected to under-perform the Vanguard Mega. In addition to that, Allianzgi Technology is 1.3 times more volatile than Vanguard Mega Cap. It trades about -0.11 of its total potential returns per unit of risk. Vanguard Mega Cap is currently generating about -0.11 per unit of volatility. If you would invest  69,951  in Vanguard Mega Cap on December 23, 2024 and sell it today you would lose (7,033) from holding Vanguard Mega Cap or give up 10.05% of portfolio value over 90 days.

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

Allianzgi Technology Fund  vs.  Vanguard Mega Cap

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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Vanguard Mega Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Mega Cap 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.

Pair Trading with Allianzgi Technology and Vanguard Mega

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

The idea behind Allianzgi Technology Fund and Vanguard Mega Cap 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.