Correlation Between Aam Select and Allianzgi Nfj

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

By analyzing existing cross correlation between Aam Select Income and Allianzgi Nfj Large Cap, you can compare the effects of market volatilities on Aam Select and Allianzgi Nfj 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 Aam Select with a short position of Allianzgi Nfj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam Select and Allianzgi Nfj.

Diversification Opportunities for Aam Select and Allianzgi Nfj

0.25

Correlation Coefficient

Aam Select  Allianzgi Nfj

Modest diversification

The 3 months correlation between Aam and Allianzgi is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aam Select Income and Allianzgi Nfj Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Nfj Large and Aam Select 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 Aam Select Income are associated (or correlated) with Allianzgi Nfj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Nfj Large has no effect on the direction of Aam Select i.e., Aam Select and Allianzgi Nfj go up and down completely randomly.

Pair Corralation between Aam Select and Allianzgi Nfj

Assuming the 90 days horizon Aam Select Income is expected to under-perform the Allianzgi Nfj. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aam Select Income is 2.24 times less risky than Allianzgi Nfj. The mutual fund trades about -0.19 of its potential returns per unit of risk. The Allianzgi Nfj Large Cap is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  2,890  in Allianzgi Nfj Large Cap on September 26, 2024 and sell it today you would lose (103.00) from holding Allianzgi Nfj Large Cap or give up 3.56% of portfolio value over 90 days.

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

Aam Select Income  vs.  Allianzgi Nfj Large Cap

Aam Select Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Allianzgi Nfj Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allianzgi Nfj Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Allianzgi Nfj is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aam Select and Allianzgi Nfj

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

The idea behind Aam Select Income and Allianzgi Nfj Large Cap 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.