Correlation Between Allianz SE and Equitable Holdings

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

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

Diversification Opportunities for Allianz SE and Equitable Holdings

-0.08

Correlation Coefficient

Allianz SE  Equitable Holdings

Good diversification

The 3 months correlation between Allianz and Equitable is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Allianz SE and Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Holdings 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 Equitable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Holdings has no effect on the direction of Allianz SE i.e., Allianz SE and Equitable Holdings go up and down completely randomly.

Pair Corralation between Allianz SE and Equitable Holdings

Assuming the 90 days horizon Allianz SE is expected to generate 72.73 times less return on investment than Equitable Holdings. But when comparing it to its historical volatility, Allianz SE is 2.53 times less risky than Equitable Holdings. It trades about 0.0 of its potential returns per unit of risk. Equitable Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,700  in Equitable Holdings on September 23, 2024 and sell it today you would earn a total of  520.00  from holding Equitable Holdings or generate 14.05% return on investment over 90 days.

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

Allianz SE  vs.  Equitable Holdings

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.

Equitable Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equitable Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Equitable Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allianz SE and Equitable Holdings

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

The idea behind Allianz SE and Equitable Holdings 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.