Correlation Between Allianzgi Diversified and Federated Kaufmann

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

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

Diversification Opportunities for Allianzgi Diversified and Federated Kaufmann

0.99

Correlation Coefficient

Allianzgi Diversified  Federated Kaufmann

No risk reduction

The 3 months correlation between Allianzgi and Federated is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Diversified Income and Federated Kaufmann Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann and Allianzgi Diversified 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 Allianzgi Diversified Income are associated (or correlated) with Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann has no effect on the direction of Allianzgi Diversified i.e., Allianzgi Diversified and Federated Kaufmann go up and down completely randomly.

Pair Corralation between Allianzgi Diversified and Federated Kaufmann

Assuming the 90 days horizon Allianzgi Diversified Income is expected to under-perform the Federated Kaufmann. But the mutual fund apears to be less risky and, when comparing its historical volatility, Allianzgi Diversified Income is 1.3 times less risky than Federated Kaufmann. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Federated Kaufmann Fund is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  562.00  in Federated Kaufmann Fund on December 23, 2024 and sell it today you would lose (42.00) from holding Federated Kaufmann Fund or give up 7.47% of portfolio value over 90 days.

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

Allianzgi Diversified Income  vs.  Federated Kaufmann Fund

Allianzgi Diversified

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allianzgi Diversified Income 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.

Federated Kaufmann

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federated Kaufmann 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 Allianzgi Diversified and Federated Kaufmann

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

The idea behind Allianzgi Diversified Income and Federated Kaufmann 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.