Correlation Between Allianz SE and NN Group

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

By analyzing existing cross correlation between Allianz SE and NN Group NV, you can compare the effects of market volatilities on Allianz SE and NN Group 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 NN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianz SE and NN Group.

Diversification Opportunities for Allianz SE and NN Group

0.03

Correlation Coefficient

Allianz SE  NN Group

Significant diversification

The 3 months correlation between Allianz and 2NN is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Allianz SE and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV 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 are associated (or correlated) with NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Allianz SE i.e., Allianz SE and NN Group go up and down completely randomly.

Pair Corralation between Allianz SE and NN Group

Assuming the 90 days horizon Allianz SE is expected to generate 0.8 times more return on investment than NN Group. However, Allianz SE is 1.24 times less risky than NN Group. It trades about 0.12 of its potential returns per unit of risk. NN Group NV is currently generating about -0.06 per unit of risk. If you would invest  28,460  in Allianz SE on September 12, 2024 and sell it today you would earn a total of  1,570  from holding Allianz SE or generate 5.52% return on investment over 90 days.

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

Allianz SE  vs.  NN Group NV

Allianz SE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz SE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. 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.

NN Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Allianz SE and NN Group

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

The idea behind Allianz SE and NN Group NV 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.