Correlation Between North American and Allianzgi Convertible

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

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

Diversification Opportunities for North American and Allianzgi Convertible

0.66

Correlation Coefficient

North American  Allianzgi Convertible

Poor diversification

The 3 months correlation between North and Allianzgi is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial and Allianzgi Convertible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Convertible and North American 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 North American Financial 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 North American i.e., North American and Allianzgi Convertible go up and down completely randomly.

Pair Corralation between North American and Allianzgi Convertible

Assuming the 90 days horizon North American Financial is expected to under-perform the Allianzgi Convertible. In addition to that, North American is 2.7 times more volatile than Allianzgi Convertible Income. It trades about -0.04 of its total potential returns per unit of risk. Allianzgi Convertible Income is currently generating about -0.07 per unit of volatility. If you would invest  1,358  in Allianzgi Convertible Income on December 29, 2024 and sell it today you would lose (61.00) from holding Allianzgi Convertible Income or give up 4.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	80.33%
Values	Daily Returns

North American Financial  vs.  Allianzgi Convertible Income

North American Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days North American Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Allianzgi Convertible

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allianzgi Convertible Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable fundamental indicators, Allianzgi Convertible is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with North American and Allianzgi Convertible

The main advantage of trading using opposite North American and Allianzgi Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American 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 North American Financial 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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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.