Correlation Between Virtus AllianzGI and Tri Continental

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

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

Diversification Opportunities for Virtus AllianzGI and Tri Continental

0.84

Correlation Coefficient

Virtus AllianzGI  Tri Continental

Very poor diversification

The 3 months correlation between Virtus and Tri is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Virtus AllianzGI Convertible and Tri Continental PFD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri Continental PFD and Virtus AllianzGI 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 Virtus AllianzGI Convertible are associated (or correlated) with Tri Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri Continental PFD has no effect on the direction of Virtus AllianzGI i.e., Virtus AllianzGI and Tri Continental go up and down completely randomly.

Pair Corralation between Virtus AllianzGI and Tri Continental

Assuming the 90 days trading horizon Virtus AllianzGI Convertible is expected to under-perform the Tri Continental. But the preferred stock apears to be less risky and, when comparing its historical volatility, Virtus AllianzGI Convertible is 1.04 times less risky than Tri Continental. The preferred stock trades about -0.24 of its potential returns per unit of risk. The Tri Continental PFD is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,488  in Tri Continental PFD on October 13, 2024 and sell it today you would earn a total of  12.00  from holding Tri Continental PFD or generate 0.27% return on investment over 90 days.

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

Virtus AllianzGI Convertible  vs.  Tri Continental PFD

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.

Tri Continental PFD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tri Continental PFD has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Tri Continental is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Virtus AllianzGI and Tri Continental

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

The idea behind Virtus AllianzGI Convertible and Tri Continental PFD 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.