Correlation Between Aberdeen Income and Allianzgi Convertible
Can any of the company-specific risk be diversified away by investing in both Aberdeen Income and Allianzgi Convertible 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 Aberdeen Income and Allianzgi Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Income Credit and Allianzgi Convertible Income, you can compare the effects of market volatilities on Aberdeen Income and Allianzgi Convertible 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 Aberdeen Income with a short position of Allianzgi Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Income and Allianzgi Convertible.
Diversification Opportunities for Aberdeen Income and Allianzgi Convertible
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aberdeen and Allianzgi is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Income Credit and Allianzgi Convertible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Convertible and Aberdeen Income 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 Aberdeen Income Credit are associated (or correlated) with Allianzgi Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Convertible has no effect on the direction of Aberdeen Income i.e., Aberdeen Income and Allianzgi Convertible go up and down completely randomly.
Pair Corralation between Aberdeen Income and Allianzgi Convertible
Considering the 90-day investment horizon Aberdeen Income is expected to generate 5.24 times less return on investment than Allianzgi Convertible. But when comparing it to its historical volatility, Aberdeen Income Credit is 1.65 times less risky than Allianzgi Convertible. It trades about 0.06 of its potential returns per unit of risk. Allianzgi Convertible Income is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 341.00 in Allianzgi Convertible Income on August 28, 2024 and sell it today you would earn a total of 27.00 from holding Allianzgi Convertible Income or generate 7.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Income Credit vs. Allianzgi Convertible Income
Performance |
| Timeline |
| Aberdeen Income Credit |
| Allianzgi Convertible |
Aberdeen Income and Allianzgi Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Income and Allianzgi Convertible
The main advantage of trading using opposite Aberdeen Income and Allianzgi Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Income position performs unexpectedly, Allianzgi Convertible 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 Convertible will offset losses from the drop in Allianzgi Convertible's long position.The idea behind Aberdeen Income Credit and Allianzgi Convertible Income 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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Check out your portfolio center.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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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