Correlation Between Highland Floating and Allianzgi Diversified

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

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

Diversification Opportunities for Highland Floating and Allianzgi Diversified

-0.14

Correlation Coefficient

Highland Floating  Allianzgi Diversified

Good diversification

The 3 months correlation between Highland and Allianzgi is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Highland Floating Rate and Allianzgi Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Diversified and Highland Floating 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 Highland Floating Rate are associated (or correlated) with Allianzgi Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Diversified has no effect on the direction of Highland Floating i.e., Highland Floating and Allianzgi Diversified go up and down completely randomly.

Pair Corralation between Highland Floating and Allianzgi Diversified

Given the investment horizon of 90 days Highland Floating Rate is expected to under-perform the Allianzgi Diversified. In addition to that, Highland Floating is 1.71 times more volatile than Allianzgi Diversified Income. It trades about -0.13 of its total potential returns per unit of risk. Allianzgi Diversified Income is currently generating about 0.11 per unit of volatility. If you would invest  2,078  in Allianzgi Diversified Income on October 4, 2024 and sell it today you would earn a total of  124.00  from holding Allianzgi Diversified Income or generate 5.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Highland Floating Rate  vs.  Allianzgi Diversified Income

Highland Floating Rate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highland Floating Rate has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the fund investors.

Allianzgi Diversified

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Diversified Income are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable fundamental indicators, Allianzgi Diversified 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 Highland Floating and Allianzgi Diversified

The main advantage of trading using opposite Highland Floating and Allianzgi Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Floating position performs unexpectedly, Allianzgi Diversified 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 Diversified will offset losses from the drop in Allianzgi Diversified's long position.

The idea behind Highland Floating Rate and Allianzgi Diversified 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.