Correlation Between New World and Allianzgi Technology

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

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

Diversification Opportunities for New World and Allianzgi Technology

-0.18

Correlation Coefficient

New World  Allianzgi Technology

Good diversification

The 3 months correlation between New and Allianzgi is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Allianzgi Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Technology and New World 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 New World Fund 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 New World i.e., New World and Allianzgi Technology go up and down completely randomly.

Pair Corralation between New World and Allianzgi Technology

Assuming the 90 days horizon New World Fund is expected to generate 0.45 times more return on investment than Allianzgi Technology. However, New World Fund is 2.2 times less risky than Allianzgi Technology. It trades about 0.04 of its potential returns per unit of risk. Allianzgi Technology Fund is currently generating about -0.1 per unit of risk. If you would invest  7,609  in New World Fund on December 29, 2024 and sell it today you would earn a total of  127.00  from holding New World Fund or generate 1.67% return on investment over 90 days.

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

New World Fund  vs.  Allianzgi Technology Fund

New World Fund

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New World Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, New World is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 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 New World and Allianzgi Technology

The main advantage of trading using opposite New World and Allianzgi Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World 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 New World Fund 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.