Correlation Between Rational Strategic and Allianzgi Health

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

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

Diversification Opportunities for Rational Strategic and Allianzgi Health

0.5

Correlation Coefficient

Rational Strategic  Allianzgi Health

Very weak diversification

The 3 months correlation between Rational and Allianzgi is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Rational Strategic Allocation and Allianzgi Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Health Sciences and Rational Strategic 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 Rational Strategic Allocation are associated (or correlated) with Allianzgi Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Health Sciences has no effect on the direction of Rational Strategic i.e., Rational Strategic and Allianzgi Health go up and down completely randomly.

Pair Corralation between Rational Strategic and Allianzgi Health

Assuming the 90 days horizon Rational Strategic Allocation is expected to under-perform the Allianzgi Health. In addition to that, Rational Strategic is 2.2 times more volatile than Allianzgi Health Sciences. It trades about -0.13 of its total potential returns per unit of risk. Allianzgi Health Sciences is currently generating about -0.03 per unit of volatility. If you would invest  2,911  in Allianzgi Health Sciences on December 24, 2024 and sell it today you would lose (48.00) from holding Allianzgi Health Sciences or give up 1.65% of portfolio value over 90 days.

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

Rational Strategic Allocation  vs.  Allianzgi Health Sciences

Rational Strategic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rational Strategic Allocation 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.

Allianzgi Health Sciences

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Rational Strategic and Allianzgi Health

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

The idea behind Rational Strategic Allocation and Allianzgi Health Sciences 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.