Correlation Between Small Cap and Allianzgi Nfj

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

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

Diversification Opportunities for Small Cap and Allianzgi Nfj

0.9

Correlation Coefficient

Small Cap  Allianzgi Nfj

Almost no diversification

The 3 months correlation between Small and Allianzgi is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Allianzgi Nfj Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Nfj Large and Small Cap 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 Small Cap Stock are associated (or correlated) with Allianzgi Nfj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Nfj Large has no effect on the direction of Small Cap i.e., Small Cap and Allianzgi Nfj go up and down completely randomly.

Pair Corralation between Small Cap and Allianzgi Nfj

Assuming the 90 days horizon Small Cap Stock is expected to under-perform the Allianzgi Nfj. In addition to that, Small Cap is 1.58 times more volatile than Allianzgi Nfj Large Cap. It trades about -0.23 of its total potential returns per unit of risk. Allianzgi Nfj Large Cap is currently generating about -0.14 per unit of volatility. If you would invest  2,984  in Allianzgi Nfj Large Cap on November 29, 2024 and sell it today you would lose (181.00) from holding Allianzgi Nfj Large Cap or give up 6.07% of portfolio value over 90 days.

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

Small Cap Stock  vs.  Allianzgi Nfj Large Cap

Small Cap Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Small Cap Stock 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 March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Allianzgi Nfj Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allianzgi Nfj Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Small Cap and Allianzgi Nfj

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

The idea behind Small Cap Stock and Allianzgi Nfj Large 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.