Correlation Between Allianzgi Convertible and North American

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

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

Diversification Opportunities for Allianzgi Convertible and North American

-0.47

Correlation Coefficient

Allianzgi Convertible  North American

Very good diversification

The 3 months correlation between Allianzgi and North is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Convertible Income and North American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Financial and Allianzgi Convertible 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 Allianzgi Convertible Income are associated (or correlated) with North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Financial has no effect on the direction of Allianzgi Convertible i.e., Allianzgi Convertible and North American go up and down completely randomly.

Pair Corralation between Allianzgi Convertible and North American

Considering the 90-day investment horizon Allianzgi Convertible Income is expected to under-perform the North American. But the fund apears to be less risky and, when comparing its historical volatility, Allianzgi Convertible Income is 2.04 times less risky than North American. The fund trades about -0.07 of its potential returns per unit of risk. The North American Financial is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  506.00  in North American Financial on December 1, 2024 and sell it today you would lose (13.00) from holding North American Financial or give up 2.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	71.67%
Values	Daily Returns

Allianzgi Convertible Income  vs.  North American Financial

Allianzgi Convertible

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allianzgi Convertible Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable fundamental indicators, Allianzgi Convertible is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

North American Financial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Allianzgi Convertible and North American

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

The idea behind Allianzgi Convertible Income and North American Financial 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 Global Correlations module to find global opportunities by holding instruments from different markets.