Correlation Between Allianzgi Convertible and Nuveen Preferred
Can any of the company-specific risk be diversified away by investing in both Allianzgi Convertible and Nuveen Preferred 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 Nuveen Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allianzgi Convertible Income and Nuveen Preferred Securities, you can compare the effects of market volatilities on Allianzgi Convertible and Nuveen Preferred 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 Nuveen Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianzgi Convertible and Nuveen Preferred.
Diversification Opportunities for Allianzgi Convertible and Nuveen Preferred
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Allianzgi and Nuveen is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Convertible Income and Nuveen Preferred Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Preferred Sec 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 Convertible Income are associated (or correlated) with Nuveen Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Preferred Sec has no effect on the direction of Allianzgi Convertible i.e., Allianzgi Convertible and Nuveen Preferred go up and down completely randomly.
Pair Corralation between Allianzgi Convertible and Nuveen Preferred
Assuming the 90 days horizon Allianzgi Convertible Income is expected to generate 3.24 times more return on investment than Nuveen Preferred. However, Allianzgi Convertible is 3.24 times more volatile than Nuveen Preferred Securities. It trades about 0.1 of its potential returns per unit of risk. Nuveen Preferred Securities is currently generating about 0.23 per unit of risk. If you would invest 323.00 in Allianzgi Convertible Income on September 12, 2024 and sell it today you would earn a total of 83.00 from holding Allianzgi Convertible Income or generate 25.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allianzgi Convertible Income vs. Nuveen Preferred Securities
Performance |
| Timeline |
| Allianzgi Convertible |
| Nuveen Preferred Sec |
Allianzgi Convertible and Nuveen Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allianzgi Convertible and Nuveen Preferred
The main advantage of trading using opposite Allianzgi Convertible and Nuveen Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianzgi Convertible position performs unexpectedly, Nuveen Preferred 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 Nuveen Preferred will offset losses from the drop in Nuveen Preferred's long position.The idea behind Allianzgi Convertible Income and Nuveen Preferred Securities 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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