Correlation Between HYB and Virtus AllianzGI

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

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

Diversification Opportunities for HYB and Virtus AllianzGI

0.2

Correlation Coefficient

HYB  Virtus AllianzGI

Modest diversification

The 3 months correlation between HYB and Virtus is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding HYB and Virtus AllianzGI Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus AllianzGI Con and HYB 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 HYB are associated (or correlated) with Virtus AllianzGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus AllianzGI Con has no effect on the direction of HYB i.e., HYB and Virtus AllianzGI go up and down completely randomly.

Pair Corralation between HYB and Virtus AllianzGI

Considering the 90-day investment horizon HYB is expected to generate 4.04 times less return on investment than Virtus AllianzGI. But when comparing it to its historical volatility, HYB is 1.4 times less risky than Virtus AllianzGI. It trades about 0.08 of its potential returns per unit of risk. Virtus AllianzGI Convertible is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,064  in Virtus AllianzGI Convertible on December 27, 2024 and sell it today you would earn a total of  133.00  from holding Virtus AllianzGI Convertible or generate 6.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	63.93%
Values	Daily Returns

HYB  vs.  Virtus AllianzGI Convertible

HYB

Risk-Adjusted Performance

Modest

Over the last 90 days HYB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HYB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Virtus AllianzGI Con

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus AllianzGI Convertible are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Virtus AllianzGI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HYB and Virtus AllianzGI

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

The idea behind HYB and Virtus AllianzGI Convertible 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..