Correlation Between Technology Ultrasector and Allianzgi Technology

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

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

Diversification Opportunities for Technology Ultrasector and Allianzgi Technology

0.99

Correlation Coefficient

Technology Ultrasector  Allianzgi Technology

No risk reduction

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

Pair Corralation between Technology Ultrasector and Allianzgi Technology

Assuming the 90 days horizon Technology Ultrasector Profund is expected to generate 1.6 times more return on investment than Allianzgi Technology. However, Technology Ultrasector is 1.6 times more volatile than Allianzgi Technology Fund. It trades about 0.33 of its potential returns per unit of risk. Allianzgi Technology Fund is currently generating about 0.32 per unit of risk. If you would invest  14,240  in Technology Ultrasector Profund on March 31, 2024 and sell it today you would earn a total of  1,682  from holding Technology Ultrasector Profund or generate 11.81% return on investment over 90 days.

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

Technology Ultrasector Profund  vs.  Allianzgi Technology Fund

Technology Ultrasector

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Ultrasector Profund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Technology Ultrasector may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Allianzgi Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Technology Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Allianzgi Technology may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Technology Ultrasector and Allianzgi Technology

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

The idea behind Technology Ultrasector Profund and Allianzgi Technology 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.