Correlation Between Talanx AG and Allianz SE

Can any of the company-specific risk be diversified away by investing in both Talanx AG and Allianz SE 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 Talanx AG and Allianz SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Talanx AG and Allianz SE VNA, you can compare the effects of market volatilities on Talanx AG and Allianz SE 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 Talanx AG with a short position of Allianz SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and Allianz SE.

Diversification Opportunities for Talanx AG and Allianz SE

0.44

Correlation Coefficient

Talanx AG  Allianz SE

Very weak diversification

The 3 months correlation between Talanx and Allianz is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG and Allianz SE VNA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE VNA and Talanx AG 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 Talanx AG are associated (or correlated) with Allianz SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz SE VNA has no effect on the direction of Talanx AG i.e., Talanx AG and Allianz SE go up and down completely randomly.

Pair Corralation between Talanx AG and Allianz SE

Assuming the 90 days trading horizon Talanx AG is expected to generate 3.62 times less return on investment than Allianz SE. In addition to that, Talanx AG is 1.36 times more volatile than Allianz SE VNA. It trades about 0.01 of its total potential returns per unit of risk. Allianz SE VNA is currently generating about 0.06 per unit of volatility. If you would invest  29,140  in Allianz SE VNA on September 23, 2024 and sell it today you would earn a total of  320.00  from holding Allianz SE VNA or generate 1.1% return on investment over 90 days.

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

Talanx AG  vs.  Allianz SE VNA

Talanx AG

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Talanx AG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Allianz SE VNA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allianz SE VNA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Allianz SE is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Talanx AG and Allianz SE

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

The idea behind Talanx AG and Allianz SE VNA 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.