Correlation Between Schwab Health and Allianzgi Health

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

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

Diversification Opportunities for Schwab Health and Allianzgi Health

0.5

Correlation Coefficient

Schwab Health  Allianzgi Health

Very weak diversification

The 3 months correlation between Schwab and Allianzgi is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Health Care and Allianzgi Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Health Sciences and Schwab 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 Schwab Health Care are associated (or correlated) with Allianzgi Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Health Sciences has no effect on the direction of Schwab Health i.e., Schwab Health and Allianzgi Health go up and down completely randomly.

Pair Corralation between Schwab Health and Allianzgi Health

Assuming the 90 days horizon Schwab Health Care is expected to under-perform the Allianzgi Health. But the mutual fund apears to be less risky and, when comparing its historical volatility, Schwab Health Care is 1.16 times less risky than Allianzgi Health. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Allianzgi Health Sciences is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,795  in Allianzgi Health Sciences on March 23, 2025 and sell it today you would lose (201.00) from holding Allianzgi Health Sciences or give up 7.19% of portfolio value over 90 days.

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

Schwab Health Care  vs.  Allianzgi Health Sciences

Schwab Health Care

Risk-Adjusted Performance

Very Weak

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

Allianzgi Health Sciences

Risk-Adjusted Performance

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.

Pair Trading with Schwab Health and Allianzgi Health

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

The idea behind Schwab Health Care and Allianzgi Health Sciences 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .