Correlation Between Allianzgi Health and Dreyfus Government

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

By analyzing existing cross correlation between Allianzgi Health Sciences and Dreyfus Government Cash, you can compare the effects of market volatilities on Allianzgi Health and Dreyfus Government 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 Health with a short position of Dreyfus Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianzgi Health and Dreyfus Government.

Diversification Opportunities for Allianzgi Health and Dreyfus Government

-0.41

Correlation Coefficient

Allianzgi Health  Dreyfus Government

Very good diversification

The 3 months correlation between Allianzgi and Dreyfus is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Health Sciences and Dreyfus Government Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Government Cash and Allianzgi Health 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 Health Sciences are associated (or correlated) with Dreyfus Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Government Cash has no effect on the direction of Allianzgi Health i.e., Allianzgi Health and Dreyfus Government go up and down completely randomly.

Pair Corralation between Allianzgi Health and Dreyfus Government

Assuming the 90 days horizon Allianzgi Health Sciences is expected to generate 3.17 times more return on investment than Dreyfus Government. However, Allianzgi Health is 3.17 times more volatile than Dreyfus Government Cash. It trades about 0.03 of its potential returns per unit of risk. Dreyfus Government Cash is currently generating about 0.06 per unit of risk. If you would invest  2,623  in Allianzgi Health Sciences on September 26, 2024 and sell it today you would earn a total of  184.00  from holding Allianzgi Health Sciences or generate 7.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.73%
Values	Daily Returns

Allianzgi Health Sciences  vs.  Dreyfus Government Cash

Allianzgi Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allianzgi Health Sciences has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Dreyfus Government Cash

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Government Cash are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dreyfus Government 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 Health and Dreyfus Government

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

The idea behind Allianzgi Health Sciences and Dreyfus Government Cash 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.