Correlation Between American Funds and Allianzgi Focused

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

By analyzing existing cross correlation between American Funds The and Allianzgi Focused Growth, you can compare the effects of market volatilities on American Funds and Allianzgi Focused 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 American Funds with a short position of Allianzgi Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Allianzgi Focused.

Diversification Opportunities for American Funds and Allianzgi Focused

0.95

Correlation Coefficient

American Funds  Allianzgi Focused

Almost no diversification

The 3 months correlation between American and Allianzgi is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding American Funds The and Allianzgi Focused Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Focused Growth and American Funds 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 American Funds The are associated (or correlated) with Allianzgi Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Focused Growth has no effect on the direction of American Funds i.e., American Funds and Allianzgi Focused go up and down completely randomly.

Pair Corralation between American Funds and Allianzgi Focused

Assuming the 90 days horizon American Funds is expected to generate 1.35 times less return on investment than Allianzgi Focused. But when comparing it to its historical volatility, American Funds The is 1.03 times less risky than Allianzgi Focused. It trades about 0.11 of its potential returns per unit of risk. Allianzgi Focused Growth is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,673  in Allianzgi Focused Growth on February 26, 2024 and sell it today you would earn a total of  3,275  from holding Allianzgi Focused Growth or generate 89.16% return on investment over 90 days.

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

American Funds The  vs.  Allianzgi Focused Growth

American Funds

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds The are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Allianzgi Focused Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Focused Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Allianzgi Focused is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Funds and Allianzgi Focused

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

The idea behind American Funds The and Allianzgi Focused Growth 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.