Correlation Between Smithson Investment and Allianz Technology
Can any of the company-specific risk be diversified away by investing in both Smithson Investment 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 Smithson Investment and Allianz Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smithson Investment Trust and Allianz Technology Trust, you can compare the effects of market volatilities on Smithson Investment 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 Smithson Investment with a short position of Allianz Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and Allianz Technology.
Diversification Opportunities for Smithson Investment and Allianz Technology
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smithson and Allianz is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust 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 Smithson Investment 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 Smithson Investment Trust 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 Smithson Investment i.e., Smithson Investment and Allianz Technology go up and down completely randomly.
Pair Corralation between Smithson Investment and Allianz Technology
Assuming the 90 days trading horizon Smithson Investment is expected to generate 1.71 times less return on investment than Allianz Technology. But when comparing it to its historical volatility, Smithson Investment Trust is 1.51 times less risky than Allianz Technology. It trades about 0.19 of its potential returns per unit of risk. Allianz Technology Trust is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 37,700 in Allianz Technology Trust on August 29, 2024 and sell it today you would earn a total of 2,800 from holding Allianz Technology Trust or generate 7.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smithson Investment Trust vs. Allianz Technology Trust
Performance |
| Timeline |
| Smithson Investment Trust |
| Allianz Technology Trust |
Smithson Investment and Allianz Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithson Investment and Allianz Technology
The main advantage of trading using opposite Smithson Investment and Allianz Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson Investment 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.| Smithson Investment vs. Catalyst Media Group | Smithson Investment vs. Oncimmune Holdings plc | Smithson Investment vs. Invesco Health Care | Smithson Investment vs. Coor Service Management |
| Allianz Technology vs. Catalyst Media Group | Allianz Technology vs. Oncimmune Holdings plc | Allianz Technology vs. Invesco Health Care | Allianz Technology vs. Coor Service Management |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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