Correlation Between CBH and Allianzgi Convertible

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

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

Diversification Opportunities for CBH and Allianzgi Convertible

0.78

Correlation Coefficient

CBH  Allianzgi Convertible

Poor diversification

The 3 months correlation between CBH and Allianzgi is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CBH and Allianzgi Convertible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Convertible and CBH 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 CBH 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 CBH i.e., CBH and Allianzgi Convertible go up and down completely randomly.

Pair Corralation between CBH and Allianzgi Convertible

Considering the 90-day investment horizon CBH is expected to generate 2.25 times less return on investment than Allianzgi Convertible. But when comparing it to its historical volatility, CBH is 2.3 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 0.06 of returns per unit of risk over similar time horizon. If you would invest  227.00  in Allianzgi Convertible Income on September 26, 2024 and sell it today you would earn a total of  91.00  from holding Allianzgi Convertible Income or generate 40.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	84.07%
Values	Daily Returns

CBH  vs.  Allianzgi Convertible Income

CBH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, CBH is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Allianzgi Convertible

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Convertible Income are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly abnormal fundamental indicators, Allianzgi Convertible may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CBH and Allianzgi Convertible

The main advantage of trading using opposite CBH and Allianzgi Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBH 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 CBH 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.