Correlation Between Allianzgi Convertible and MFS High

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

Diversification Opportunities for Allianzgi Convertible and MFS High

-0.03

Correlation Coefficient

Allianzgi Convertible  MFS High

Good diversification

The 3 months correlation between Allianzgi and MFS is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Convertible Income and MFS High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS High Income 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 MFS High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS High Income has no effect on the direction of Allianzgi Convertible i.e., Allianzgi Convertible and MFS High go up and down completely randomly.

Pair Corralation between Allianzgi Convertible and MFS High

Considering the 90-day investment horizon Allianzgi Convertible Income is expected to under-perform the MFS High. In addition to that, Allianzgi Convertible is 1.45 times more volatile than MFS High Income. It trades about -0.06 of its total potential returns per unit of risk. MFS High Income is currently generating about 0.04 per unit of volatility. If you would invest  362.00  in MFS High Income on December 19, 2024 and sell it today you would earn a total of  6.00  from holding MFS High Income or generate 1.66% return on investment over 90 days.

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

Allianzgi Convertible Income  vs.  MFS High Income

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 strong fundamental indicators, Allianzgi Convertible is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

MFS High Income

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MFS High Income are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, MFS High is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Allianzgi Convertible and MFS High

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

The idea behind Allianzgi Convertible Income and MFS High 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.