Correlation Between Investor and Virtus AllianzGI

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

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

Diversification Opportunities for Investor and Virtus AllianzGI

0.77

Correlation Coefficient

Investor  Virtus AllianzGI

Poor diversification

The 3 months correlation between Investor and Virtus is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser 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 Investor 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 Investor AB ser 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 Investor i.e., Investor and Virtus AllianzGI go up and down completely randomly.

Pair Corralation between Investor and Virtus AllianzGI

Assuming the 90 days horizon Investor AB ser is expected to generate 3.0 times more return on investment than Virtus AllianzGI. However, Investor is 3.0 times more volatile than Virtus AllianzGI Convertible. It trades about 0.06 of its potential returns per unit of risk. Virtus AllianzGI Convertible is currently generating about 0.04 per unit of risk. If you would invest  1,780  in Investor AB ser on October 21, 2024 and sell it today you would earn a total of  1,033  from holding Investor AB ser or generate 58.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.06%
Values	Daily Returns

Investor AB ser  vs.  Virtus AllianzGI Convertible

Investor AB ser

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investor AB ser has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Investor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Virtus AllianzGI Con

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus AllianzGI Convertible has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Investor and Virtus AllianzGI

The main advantage of trading using opposite Investor and Virtus AllianzGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor 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 Investor AB ser 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.