Correlation Between Allianz Technology and Direct Line
Can any of the company-specific risk be diversified away by investing in both Allianz Technology and Direct Line 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 Allianz Technology and Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allianz Technology Trust and Direct Line Insurance, you can compare the effects of market volatilities on Allianz Technology and Direct Line 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 Allianz Technology with a short position of Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianz Technology and Direct Line.
Diversification Opportunities for Allianz Technology and Direct Line
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Allianz and Direct is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Allianz Technology Trust and Direct Line Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Line Insurance and Allianz Technology 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 Allianz Technology Trust are associated (or correlated) with Direct Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Line Insurance has no effect on the direction of Allianz Technology i.e., Allianz Technology and Direct Line go up and down completely randomly.
Pair Corralation between Allianz Technology and Direct Line
Assuming the 90 days trading horizon Allianz Technology is expected to generate 4.72 times less return on investment than Direct Line. But when comparing it to its historical volatility, Allianz Technology Trust is 5.8 times less risky than Direct Line. It trades about 0.27 of its potential returns per unit of risk. Direct Line Insurance is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 16,430 in Direct Line Insurance on September 1, 2024 and sell it today you would earn a total of 7,050 from holding Direct Line Insurance or generate 42.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allianz Technology Trust vs. Direct Line Insurance
Performance |
| Timeline |
| Allianz Technology Trust |
| Direct Line Insurance |
Allianz Technology and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allianz Technology and Direct Line
The main advantage of trading using opposite Allianz Technology and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianz Technology position performs unexpectedly, Direct Line 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 Direct Line will offset losses from the drop in Direct Line's long position.| Allianz Technology vs. Games Workshop Group | Allianz Technology vs. Auto Trader Group | Allianz Technology vs. SANTANDER UK 10 | Allianz Technology vs. Coor Service Management |
| Direct Line vs. Concurrent Technologies Plc | Direct Line vs. Celebrus Technologies plc | Direct Line vs. Odfjell Drilling | Direct Line vs. Allianz Technology Trust |
Check out your portfolio center.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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