Correlation Between Emerging Markets and Allianzgi Vertible

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

By analyzing existing cross correlation between Emerging Markets Fund and Allianzgi Vertible Fund, you can compare the effects of market volatilities on Emerging Markets and Allianzgi Vertible 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 Emerging Markets with a short position of Allianzgi Vertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Allianzgi Vertible.

Diversification Opportunities for Emerging Markets and Allianzgi Vertible

-0.2

Correlation Coefficient

Emerging Markets  Allianzgi Vertible

Good diversification

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

Pair Corralation between Emerging Markets and Allianzgi Vertible

Assuming the 90 days horizon Emerging Markets Fund is expected to under-perform the Allianzgi Vertible. In addition to that, Emerging Markets is 4.7 times more volatile than Allianzgi Vertible Fund. It trades about -0.26 of its total potential returns per unit of risk. Allianzgi Vertible Fund is currently generating about -0.22 per unit of volatility. If you would invest  3,838  in Allianzgi Vertible Fund on October 6, 2024 and sell it today you would lose (160.00) from holding Allianzgi Vertible Fund or give up 4.17% of portfolio value over 90 days.

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

Emerging Markets Fund  vs.  Allianzgi Vertible Fund

Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerging Markets Fund 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 fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Allianzgi Vertible

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Vertible Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Allianzgi Vertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Emerging Markets and Allianzgi Vertible

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

The idea behind Emerging Markets Fund and Allianzgi Vertible Fund 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.