Correlation Between Allianzgi Small and Kennedy Capital

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

By analyzing existing cross correlation between Allianzgi Small Cap Fund and Kennedy Capital Esg, you can compare the effects of market volatilities on Allianzgi Small and Kennedy Capital 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 Allianzgi Small with a short position of Kennedy Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianzgi Small and Kennedy Capital.

Diversification Opportunities for Allianzgi Small and Kennedy Capital

0.86

Correlation Coefficient

Allianzgi Small  Kennedy Capital

Very poor diversification

The 3 months correlation between Allianzgi and Kennedy is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Small Cap Fund and Kennedy Capital Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kennedy Capital Esg and Allianzgi Small 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 Allianzgi Small Cap Fund are associated (or correlated) with Kennedy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kennedy Capital Esg has no effect on the direction of Allianzgi Small i.e., Allianzgi Small and Kennedy Capital go up and down completely randomly.

Pair Corralation between Allianzgi Small and Kennedy Capital

Assuming the 90 days horizon Allianzgi Small Cap Fund is expected to generate 0.91 times more return on investment than Kennedy Capital. However, Allianzgi Small Cap Fund is 1.1 times less risky than Kennedy Capital. It trades about 0.1 of its potential returns per unit of risk. Kennedy Capital Esg is currently generating about -0.01 per unit of risk. If you would invest  2,581  in Allianzgi Small Cap Fund on September 21, 2024 and sell it today you would earn a total of  160.00  from holding Allianzgi Small Cap Fund or generate 6.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Allianzgi Small Cap Fund  vs.  Kennedy Capital Esg

Allianzgi Small Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Small Cap Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Allianzgi Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kennedy Capital Esg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kennedy Capital Esg has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Kennedy Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allianzgi Small and Kennedy Capital

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

The idea behind Allianzgi Small Cap Fund and Kennedy Capital Esg 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.