Correlation Between Sparta Capital and Allianzgi Mid-cap

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

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

Diversification Opportunities for Sparta Capital and Allianzgi Mid-cap

0.43

Correlation Coefficient

Sparta Capital  Allianzgi Mid-cap

Very weak diversification

The 3 months correlation between Sparta and Allianzgi is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Allianzgi Mid Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Mid Cap and Sparta Capital 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 Sparta Capital are associated (or correlated) with Allianzgi Mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Mid Cap has no effect on the direction of Sparta Capital i.e., Sparta Capital and Allianzgi Mid-cap go up and down completely randomly.

Pair Corralation between Sparta Capital and Allianzgi Mid-cap

Assuming the 90 days horizon Sparta Capital is expected to generate 10.43 times more return on investment than Allianzgi Mid-cap. However, Sparta Capital is 10.43 times more volatile than Allianzgi Mid Cap Fund. It trades about 0.01 of its potential returns per unit of risk. Allianzgi Mid Cap Fund is currently generating about -0.07 per unit of risk. If you would invest  1.03  in Sparta Capital on December 30, 2024 and sell it today you would lose (0.92) from holding Sparta Capital or give up 89.32% of portfolio value over 90 days.

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

Sparta Capital  vs.  Allianzgi Mid Cap Fund

Sparta Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparta Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, Sparta Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Allianzgi Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allianzgi Mid Cap 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 Sparta Capital and Allianzgi Mid-cap

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

The idea behind Sparta Capital and Allianzgi Mid Cap 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.