Correlation Between Legal General and Allianz SE
Can any of the company-specific risk be diversified away by investing in both Legal General and Allianz SE 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 Legal General and Allianz SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legal General Group and Allianz SE ADR, you can compare the effects of market volatilities on Legal General and Allianz SE 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 Legal General with a short position of Allianz SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legal General and Allianz SE.
Diversification Opportunities for Legal General and Allianz SE
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legal and Allianz is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Legal General Group and Allianz SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE ADR and Legal General 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 Legal General Group are associated (or correlated) with Allianz SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz SE ADR has no effect on the direction of Legal General i.e., Legal General and Allianz SE go up and down completely randomly.
Pair Corralation between Legal General and Allianz SE
Assuming the 90 days horizon Legal General is expected to generate 5.13 times less return on investment than Allianz SE. In addition to that, Legal General is 1.11 times more volatile than Allianz SE ADR. It trades about 0.02 of its total potential returns per unit of risk. Allianz SE ADR is currently generating about 0.09 per unit of volatility. If you would invest 2,010 in Allianz SE ADR on August 24, 2024 and sell it today you would earn a total of 369.00 from holding Allianz SE ADR or generate 18.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 31.85% |
| Values | Daily Returns |
Legal General Group vs. Allianz SE ADR
Performance |
| Timeline |
| Legal General Group |
| Allianz SE ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Legal General and Allianz SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legal General and Allianz SE
The main advantage of trading using opposite Legal General and Allianz SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legal General position performs unexpectedly, Allianz SE 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 SE will offset losses from the drop in Allianz SE's long position.| Legal General vs. Minerals Technologies | Legal General vs. NETGEAR | Legal General vs. Skechers USA | Legal General vs. Arrow Electronics |
| Allianz SE vs. Allianz SE | Allianz SE vs. Muenchener Rueckver Ges | Allianz SE vs. Zurich Insurance Group | Allianz SE vs. Legal General Group |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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