Correlation Between NYSE Composite and Allianz SE
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Allianz SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Allianz SE, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Allianz SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Allianz SE.
Diversification Opportunities for NYSE Composite and Allianz SE
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NYSE and Allianz is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Allianz SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE and NYSE Composite 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 NYSE Composite 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 has no effect on the direction of NYSE Composite i.e., NYSE Composite and Allianz SE go up and down completely randomly.
Pair Corralation between NYSE Composite and Allianz SE
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.39 times less return on investment than Allianz SE. But when comparing it to its historical volatility, NYSE Composite is 2.92 times less risky than Allianz SE. It trades about 0.13 of its potential returns per unit of risk. Allianz SE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 24,928 in Allianz SE on August 28, 2024 and sell it today you would earn a total of 5,858 from holding Allianz SE or generate 23.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.61% |
| Values | Daily Returns |
NYSE Composite vs. Allianz SE
Performance |
| Timeline |
NYSE Composite and Allianz SE Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Allianz SE
Pair trading matchups for Allianz SE
Pair Trading with NYSE Composite and Allianz SE
The main advantage of trading using opposite NYSE Composite and Allianz SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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