Correlation Between IA FINANCIAL and Allianz SE

Can any of the company-specific risk be diversified away by investing in both IA FINANCIAL 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 IA FINANCIAL and Allianz SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IA FINANCIAL P and Allianz SE, you can compare the effects of market volatilities on IA FINANCIAL 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 IA FINANCIAL with a short position of Allianz SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA FINANCIAL and Allianz SE.

Diversification Opportunities for IA FINANCIAL and Allianz SE

0.02

Correlation Coefficient

IA FINANCIAL  Allianz SE

Significant diversification

The 3 months correlation between 1OD and Allianz is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding IA FINANCIAL P and Allianz SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE and IA FINANCIAL 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 IA FINANCIAL P 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 IA FINANCIAL i.e., IA FINANCIAL and Allianz SE go up and down completely randomly.

Pair Corralation between IA FINANCIAL and Allianz SE

Assuming the 90 days horizon IA FINANCIAL P is expected to generate 2.86 times more return on investment than Allianz SE. However, IA FINANCIAL is 2.86 times more volatile than Allianz SE. It trades about 0.14 of its potential returns per unit of risk. Allianz SE is currently generating about 0.0 per unit of risk. If you would invest  7,375  in IA FINANCIAL P on September 28, 2024 and sell it today you would earn a total of  1,425  from holding IA FINANCIAL P or generate 19.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

IA FINANCIAL P  vs.  Allianz SE

IA FINANCIAL P

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IA FINANCIAL P are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, IA FINANCIAL reported solid returns over the last few months and may actually be approaching a breakup point.

Allianz SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allianz SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Allianz SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IA FINANCIAL and Allianz SE

The main advantage of trading using opposite IA FINANCIAL and Allianz SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA FINANCIAL 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.

The idea behind IA FINANCIAL P and Allianz SE 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.