Correlation Between Allianzgi Convertible and First Trust

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

Diversification Opportunities for Allianzgi Convertible and First Trust

-0.27

Correlation Coefficient

Allianzgi Convertible  First Trust

Very good diversification

The 3 months correlation between Allianzgi and First is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Convertible Income and First Trust Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Intermediate 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Intermediate has no effect on the direction of Allianzgi Convertible i.e., Allianzgi Convertible and First Trust go up and down completely randomly.

Pair Corralation between Allianzgi Convertible and First Trust

Considering the 90-day investment horizon Allianzgi Convertible Income is expected to generate 1.38 times more return on investment than First Trust. However, Allianzgi Convertible is 1.38 times more volatile than First Trust Intermediate. It trades about 0.06 of its potential returns per unit of risk. First Trust Intermediate is currently generating about 0.05 per unit of risk. If you would invest  227.00  in Allianzgi Convertible Income on September 26, 2024 and sell it today you would earn a total of  91.00  from holding Allianzgi Convertible Income or generate 40.09% 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.  First Trust Intermediate

Allianzgi Convertible

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Convertible Income are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly abnormal fundamental indicators, Allianzgi Convertible may actually be approaching a critical reversion point that can send shares even higher in January 2025.

First Trust Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust Intermediate has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, First Trust is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Allianzgi Convertible and First Trust

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

The idea behind Allianzgi Convertible Income and First Trust Intermediate 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.