Correlation Between Fevertree Drinks and Allianz Technology

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

By analyzing existing cross correlation between Fevertree Drinks Plc and Allianz Technology Trust, you can compare the effects of market volatilities on Fevertree Drinks and Allianz Technology 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 Fevertree Drinks with a short position of Allianz Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Allianz Technology.

Diversification Opportunities for Fevertree Drinks and Allianz Technology

-0.82

Correlation Coefficient

Fevertree Drinks  Allianz Technology

Pay attention - limited upside

The 3 months correlation between Fevertree and Allianz is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Allianz Technology Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz Technology Trust and Fevertree Drinks 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 Fevertree Drinks Plc are associated (or correlated) with Allianz Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz Technology Trust has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and Allianz Technology go up and down completely randomly.

Pair Corralation between Fevertree Drinks and Allianz Technology

Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to under-perform the Allianz Technology. In addition to that, Fevertree Drinks is 1.25 times more volatile than Allianz Technology Trust. It trades about -0.03 of its total potential returns per unit of risk. Allianz Technology Trust is currently generating about 0.09 per unit of volatility. If you would invest  20,650  in Allianz Technology Trust on September 26, 2024 and sell it today you would earn a total of  21,450  from holding Allianz Technology Trust or generate 103.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.4%
Values	Daily Returns

Fevertree Drinks Plc  vs.  Allianz Technology Trust

Fevertree Drinks Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fevertree Drinks Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Allianz Technology Trust

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz Technology Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Allianz Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fevertree Drinks and Allianz Technology

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

The idea behind Fevertree Drinks Plc and Allianz Technology Trust 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.