Correlation Between Allianzgi Technology and Sarofim Equity

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

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

Diversification Opportunities for Allianzgi Technology and Sarofim Equity

0.77

Correlation Coefficient

Allianzgi Technology  Sarofim Equity

Poor diversification

The 3 months correlation between Allianzgi and Sarofim is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Technology Fund and Sarofim Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarofim Equity and Allianzgi Technology 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 Technology Fund are associated (or correlated) with Sarofim Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarofim Equity has no effect on the direction of Allianzgi Technology i.e., Allianzgi Technology and Sarofim Equity go up and down completely randomly.

Pair Corralation between Allianzgi Technology and Sarofim Equity

Assuming the 90 days horizon Allianzgi Technology Fund is expected to generate 1.91 times more return on investment than Sarofim Equity. However, Allianzgi Technology is 1.91 times more volatile than Sarofim Equity. It trades about 0.17 of its potential returns per unit of risk. Sarofim Equity is currently generating about 0.11 per unit of risk. If you would invest  7,747  in Allianzgi Technology Fund on September 4, 2024 and sell it today you would earn a total of  1,150  from holding Allianzgi Technology Fund or generate 14.84% return on investment over 90 days.

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

Allianzgi Technology Fund  vs.  Sarofim Equity

Allianzgi Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Technology Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Allianzgi Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Sarofim Equity

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sarofim Equity are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Sarofim Equity 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 Technology and Sarofim Equity

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

The idea behind Allianzgi Technology Fund and Sarofim Equity 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.