Correlation Between Allianzgi Convertible and WhiteHorse Finance

Can any of the company-specific risk be diversified away by investing in both Allianzgi Convertible and WhiteHorse Finance 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 WhiteHorse Finance 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 WhiteHorse Finance, you can compare the effects of market volatilities on Allianzgi Convertible and WhiteHorse Finance 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 WhiteHorse Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianzgi Convertible and WhiteHorse Finance.

Diversification Opportunities for Allianzgi Convertible and WhiteHorse Finance

0.43

Correlation Coefficient

Allianzgi Convertible  WhiteHorse Finance

Very weak diversification

The 3 months correlation between Allianzgi and WhiteHorse is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Convertible Income and WhiteHorse Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WhiteHorse Finance 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 WhiteHorse Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WhiteHorse Finance has no effect on the direction of Allianzgi Convertible i.e., Allianzgi Convertible and WhiteHorse Finance go up and down completely randomly.

Pair Corralation between Allianzgi Convertible and WhiteHorse Finance

Considering the 90-day investment horizon Allianzgi Convertible Income is expected to under-perform the WhiteHorse Finance. But the fund apears to be less risky and, when comparing its historical volatility, Allianzgi Convertible Income is 1.09 times less risky than WhiteHorse Finance. The fund trades about -0.05 of its potential returns per unit of risk. The WhiteHorse Finance is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,018  in WhiteHorse Finance on November 27, 2024 and sell it today you would earn a total of  86.00  from holding WhiteHorse Finance or generate 8.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Allianzgi Convertible Income  vs.  WhiteHorse Finance

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.

WhiteHorse Finance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WhiteHorse Finance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, WhiteHorse Finance may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Allianzgi Convertible and WhiteHorse Finance

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

The idea behind Allianzgi Convertible Income and WhiteHorse Finance 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.