Correlation Between Allianz SE and Brown Brown

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

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

Diversification Opportunities for Allianz SE and Brown Brown

-0.39

Correlation Coefficient

Allianz SE  Brown Brown

Very good diversification

The 3 months correlation between Allianz and Brown is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Allianz SE ADR and Brown Brown in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Brown and Allianz SE 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 Allianz SE ADR are associated (or correlated) with Brown Brown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Brown has no effect on the direction of Allianz SE i.e., Allianz SE and Brown Brown go up and down completely randomly.

Pair Corralation between Allianz SE and Brown Brown

If you would invest  7,453  in Brown Brown on September 21, 2024 and sell it today you would earn a total of  2,777  from holding Brown Brown or generate 37.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.37%
Values	Daily Returns

Allianz SE ADR  vs.  Brown Brown

Allianz SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allianz SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Allianz SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brown Brown

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brown Brown has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Brown Brown is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Allianz SE and Brown Brown

The main advantage of trading using opposite Allianz SE and Brown Brown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianz SE position performs unexpectedly, Brown Brown 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 Brown Brown will offset losses from the drop in Brown Brown's long position.

The idea behind Allianz SE ADR and Brown Brown 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.