Correlation Between First Trustconfluence and Allianzgi Technology

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Can any of the company-specific risk be diversified away by investing in both First Trustconfluence 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 First Trustconfluence and Allianzgi Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trustconfluence Small and Allianzgi Technology Fund, you can compare the effects of market volatilities on First Trustconfluence 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 First Trustconfluence with a short position of Allianzgi Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trustconfluence and Allianzgi Technology.

Diversification Opportunities for First Trustconfluence and Allianzgi Technology

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between First and Allianzgi is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Trustconfluence Small and Allianzgi Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Technology and First Trustconfluence 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 First Trustconfluence Small 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 First Trustconfluence i.e., First Trustconfluence and Allianzgi Technology go up and down completely randomly.

Pair Corralation between First Trustconfluence and Allianzgi Technology

Assuming the 90 days horizon First Trustconfluence Small is expected to under-perform the Allianzgi Technology. But the mutual fund apears to be less risky and, when comparing its historical volatility, First Trustconfluence Small is 1.31 times less risky than Allianzgi Technology. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Allianzgi Technology Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  9,016  in Allianzgi Technology Fund on September 12, 2024 and sell it today you would earn a total of  278.00  from holding Allianzgi Technology Fund or generate 3.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

First Trustconfluence Small  vs.  Allianzgi Technology Fund

 Performance 
       Timeline  
First Trustconfluence 

Risk-Adjusted Performance

7 of 100

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

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Technology Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Allianzgi Technology showed solid returns over the last few months and may actually be approaching a breakup point.

First Trustconfluence and Allianzgi Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Trustconfluence and Allianzgi Technology

The main advantage of trading using opposite First Trustconfluence and Allianzgi Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trustconfluence 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 First Trustconfluence Small 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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