Correlation Between Vanguard Small-cap and Allianzgi Focused
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Allianzgi Focused 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 Vanguard Small-cap and Allianzgi Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Value and Allianzgi Focused Growth, you can compare the effects of market volatilities on Vanguard Small-cap and Allianzgi Focused 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 Vanguard Small-cap with a short position of Allianzgi Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Allianzgi Focused.
Diversification Opportunities for Vanguard Small-cap and Allianzgi Focused
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Allianzgi is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Allianzgi Focused Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Focused Growth and Vanguard Small-cap 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 Vanguard Small Cap Value are associated (or correlated) with Allianzgi Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Focused Growth has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Allianzgi Focused go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Allianzgi Focused
Assuming the 90 days horizon Vanguard Small-cap is expected to generate 1.55 times less return on investment than Allianzgi Focused. But when comparing it to its historical volatility, Vanguard Small Cap Value is 1.16 times less risky than Allianzgi Focused. It trades about 0.07 of its potential returns per unit of risk. Allianzgi Focused Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,215 in Allianzgi Focused Growth on September 5, 2024 and sell it today you would earn a total of 1,517 from holding Allianzgi Focused Growth or generate 68.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. Allianzgi Focused Growth
Performance |
| Timeline |
| Vanguard Small Cap |
| Allianzgi Focused Growth |
Vanguard Small-cap and Allianzgi Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Allianzgi Focused
The main advantage of trading using opposite Vanguard Small-cap and Allianzgi Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Allianzgi Focused 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 Focused will offset losses from the drop in Allianzgi Focused's long position.The idea behind Vanguard Small Cap Value and Allianzgi Focused Growth 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.
| Allianzgi Focused vs. Allianzgi Nfj Mid Cap | Allianzgi Focused vs. Allianzgi Mid Cap Fund | Allianzgi Focused vs. Allianzgi International Small Cap | Allianzgi Focused vs. Stocksplus Fund Institutional |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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