Correlation Between Allianzgi Convertible and Allianzgi Small-cap
Can any of the company-specific risk be diversified away by investing in both Allianzgi Convertible and Allianzgi Small-cap 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 Convertible and Allianzgi Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allianzgi Vertible Fund and Allianzgi Small Cap Blend, you can compare the effects of market volatilities on Allianzgi Convertible and Allianzgi Small-cap 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 Convertible with a short position of Allianzgi Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianzgi Convertible and Allianzgi Small-cap.
Diversification Opportunities for Allianzgi Convertible and Allianzgi Small-cap
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Allianzgi and Allianzgi is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Vertible Fund and Allianzgi Small Cap Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Small Cap and Allianzgi Convertible 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 Vertible Fund are associated (or correlated) with Allianzgi Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Small Cap has no effect on the direction of Allianzgi Convertible i.e., Allianzgi Convertible and Allianzgi Small-cap go up and down completely randomly.
Pair Corralation between Allianzgi Convertible and Allianzgi Small-cap
Assuming the 90 days horizon Allianzgi Convertible is expected to generate 1.37 times less return on investment than Allianzgi Small-cap. But when comparing it to its historical volatility, Allianzgi Vertible Fund is 1.79 times less risky than Allianzgi Small-cap. It trades about 0.08 of its potential returns per unit of risk. Allianzgi Small Cap Blend is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,059 in Allianzgi Small Cap Blend on September 3, 2024 and sell it today you would earn a total of 638.00 from holding Allianzgi Small Cap Blend or generate 30.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allianzgi Vertible Fund vs. Allianzgi Small Cap Blend
Performance |
| Timeline |
| Allianzgi Convertible |
| Allianzgi Small Cap |
Allianzgi Convertible and Allianzgi Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allianzgi Convertible and Allianzgi Small-cap
The main advantage of trading using opposite Allianzgi Convertible and Allianzgi Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianzgi Convertible position performs unexpectedly, Allianzgi Small-cap 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 Small-cap will offset losses from the drop in Allianzgi Small-cap's long position.The idea behind Allianzgi Vertible Fund and Allianzgi Small Cap Blend 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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