Correlation Between Virtus Dividend and Allianzgi Convertible

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

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

Diversification Opportunities for Virtus Dividend and Allianzgi Convertible

0.8

Correlation Coefficient

Virtus Dividend  Allianzgi Convertible

Very poor diversification

The 3 months correlation between Virtus and Allianzgi is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Dividend Interest and Allianzgi Convertible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Convertible and Virtus Dividend 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 Dividend Interest are associated (or correlated) with Allianzgi Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Convertible has no effect on the direction of Virtus Dividend i.e., Virtus Dividend and Allianzgi Convertible go up and down completely randomly.

Pair Corralation between Virtus Dividend and Allianzgi Convertible

Considering the 90-day investment horizon Virtus Dividend Interest is expected to generate 0.58 times more return on investment than Allianzgi Convertible. However, Virtus Dividend Interest is 1.73 times less risky than Allianzgi Convertible. It trades about -0.04 of its potential returns per unit of risk. Allianzgi Convertible Income is currently generating about -0.06 per unit of risk. If you would invest  1,292  in Virtus Dividend Interest on November 28, 2024 and sell it today you would lose (19.00) from holding Virtus Dividend Interest or give up 1.47% of portfolio value over 90 days.

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

Virtus Dividend Interest  vs.  Allianzgi Convertible Income

Virtus Dividend Interest

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Dividend Interest has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively steady technical and fundamental indicators, Virtus Dividend is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

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.

Pair Trading with Virtus Dividend and Allianzgi Convertible

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

The idea behind Virtus Dividend Interest and Allianzgi Convertible 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.