Correlation Between Monroe Capital and Allianzgi Convertible

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

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

Diversification Opportunities for Monroe Capital and Allianzgi Convertible

0.83

Correlation Coefficient

Monroe Capital  Allianzgi Convertible

Very poor diversification

The 3 months correlation between Monroe and Allianzgi is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Monroe Capital Corp and Allianzgi Convertible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Convertible and Monroe Capital 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 Monroe Capital Corp 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 Monroe Capital i.e., Monroe Capital and Allianzgi Convertible go up and down completely randomly.

Pair Corralation between Monroe Capital and Allianzgi Convertible

Given the investment horizon of 90 days Monroe Capital is expected to generate 1.19 times less return on investment than Allianzgi Convertible. In addition to that, Monroe Capital is 1.34 times more volatile than Allianzgi Convertible Income. It trades about 0.03 of its total potential returns per unit of risk. Allianzgi Convertible Income is currently generating about 0.05 per unit of volatility. If you would invest  283.00  in Allianzgi Convertible Income on September 1, 2024 and sell it today you would earn a total of  89.00  from holding Allianzgi Convertible Income or generate 31.45% return on investment over 90 days.

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

Monroe Capital Corp  vs.  Allianzgi Convertible Income

Monroe Capital Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monroe Capital Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Monroe Capital may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Allianzgi Convertible

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Convertible Income are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile fundamental indicators, Allianzgi Convertible may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Monroe Capital and Allianzgi Convertible

The main advantage of trading using opposite Monroe Capital and Allianzgi Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monroe Capital 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 Monroe Capital Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.