Correlation Between Allianz SE and Targa Resources

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

By analyzing existing cross correlation between Allianz SE and Targa Resources Corp, you can compare the effects of market volatilities on Allianz SE and Targa Resources 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 Allianz SE with a short position of Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianz SE and Targa Resources.

Diversification Opportunities for Allianz SE and Targa Resources

-0.44

Correlation Coefficient

Allianz SE  Targa Resources

Very good diversification

The 3 months correlation between Allianz and Targa is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Allianz SE and Targa Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources Corp and Allianz SE 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 Allianz SE are associated (or correlated) with Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources Corp has no effect on the direction of Allianz SE i.e., Allianz SE and Targa Resources go up and down completely randomly.

Pair Corralation between Allianz SE and Targa Resources

Assuming the 90 days horizon Allianz SE is expected to generate 0.55 times more return on investment than Targa Resources. However, Allianz SE is 1.81 times less risky than Targa Resources. It trades about 0.01 of its potential returns per unit of risk. Targa Resources Corp is currently generating about 0.0 per unit of risk. If you would invest  34,239  in Allianz SE on April 20, 2025 and sell it today you would earn a total of  191.00  from holding Allianz SE or generate 0.56% return on investment over 90 days.

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

Allianz SE  vs.  Targa Resources Corp

Allianz SE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Allianz SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Targa Resources Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Targa Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Targa Resources is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Allianz SE and Targa Resources

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

The idea behind Allianz SE and Targa Resources Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.