Correlation Between Caledonia Investments and Allianz Technology
Can any of the company-specific risk be diversified away by investing in both Caledonia Investments and Allianz 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 Caledonia Investments and Allianz Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Investments and Allianz Technology Trust, you can compare the effects of market volatilities on Caledonia Investments and Allianz 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 Caledonia Investments with a short position of Allianz Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Investments and Allianz Technology.
Diversification Opportunities for Caledonia Investments and Allianz Technology
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caledonia and Allianz is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Investments and Allianz Technology Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz Technology Trust and Caledonia Investments 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 Caledonia Investments are associated (or correlated) with Allianz Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz Technology Trust has no effect on the direction of Caledonia Investments i.e., Caledonia Investments and Allianz Technology go up and down completely randomly.
Pair Corralation between Caledonia Investments and Allianz Technology
Assuming the 90 days trading horizon Caledonia Investments is expected to generate 0.45 times more return on investment than Allianz Technology. However, Caledonia Investments is 2.23 times less risky than Allianz Technology. It trades about 0.43 of its potential returns per unit of risk. Allianz Technology Trust is currently generating about 0.08 per unit of risk. If you would invest 347,000 in Caledonia Investments on November 2, 2024 and sell it today you would earn a total of 27,000 from holding Caledonia Investments or generate 7.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Caledonia Investments vs. Allianz Technology Trust
Performance |
| Timeline |
| Caledonia Investments |
| Allianz Technology Trust |
Caledonia Investments and Allianz Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Investments and Allianz Technology
The main advantage of trading using opposite Caledonia Investments and Allianz Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Investments position performs unexpectedly, Allianz 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 Allianz Technology will offset losses from the drop in Allianz Technology's long position.| Caledonia Investments vs. GreenX Metals | Caledonia Investments vs. European Metals Holdings | Caledonia Investments vs. Cornish Metals | Caledonia Investments vs. Empire Metals Limited |
| Allianz Technology vs. Ondine Biomedical | Allianz Technology vs. Advanced Medical Solutions | Allianz Technology vs. Medical Properties Trust | Allianz Technology vs. Take Two Interactive Software |
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 Stocks Directory module to find actively traded stocks across global markets.
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