Correlation Between Icon Natural and Allianzgi Convertible

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

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

Diversification Opportunities for Icon Natural and Allianzgi Convertible

-0.43

Correlation Coefficient

Icon Natural  Allianzgi Convertible

Very good diversification

The 3 months correlation between Icon and Allianzgi is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Allianzgi Convertible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Convertible and Icon Natural 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 Icon Natural Resources 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 Icon Natural i.e., Icon Natural and Allianzgi Convertible go up and down completely randomly.

Pair Corralation between Icon Natural and Allianzgi Convertible

Assuming the 90 days horizon Icon Natural Resources is expected to under-perform the Allianzgi Convertible. But the mutual fund apears to be less risky and, when comparing its historical volatility, Icon Natural Resources is 26.2 times less risky than Allianzgi Convertible. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Allianzgi Convertible Income is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  387.00  in Allianzgi Convertible Income on December 27, 2024 and sell it today you would earn a total of  1,096  from holding Allianzgi Convertible Income or generate 283.2% return on investment over 90 days.

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

Icon Natural Resources  vs.  Allianzgi Convertible Income

Icon Natural Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Icon Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Icon Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Allianzgi Convertible

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Convertible Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Allianzgi Convertible showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Icon Natural and Allianzgi Convertible

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