Correlation Between Energy Services and Allianzgi Focused

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

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

Diversification Opportunities for Energy Services and Allianzgi Focused

0.41

Correlation Coefficient

Energy Services  Allianzgi Focused

Very weak diversification

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

Pair Corralation between Energy Services and Allianzgi Focused

Assuming the 90 days horizon Energy Services is expected to generate 1.82 times less return on investment than Allianzgi Focused. In addition to that, Energy Services is 1.93 times more volatile than Allianzgi Focused Growth. It trades about 0.06 of its total potential returns per unit of risk. Allianzgi Focused Growth is currently generating about 0.2 per unit of volatility. If you would invest  3,252  in Allianzgi Focused Growth on September 1, 2024 and sell it today you would earn a total of  427.00  from holding Allianzgi Focused Growth or generate 13.13% return on investment over 90 days.

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

Energy Services Fund  vs.  Allianzgi Focused Growth

Energy Services

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Services Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Energy Services may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Allianzgi Focused Growth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Focused Growth are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Allianzgi Focused may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Energy Services and Allianzgi Focused

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

The idea behind Energy Services Fund and Allianzgi Focused Growth 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.