Correlation Between Allianzgi Equity and Federated Premier

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

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

Diversification Opportunities for Allianzgi Equity and Federated Premier

0.19

Correlation Coefficient

Allianzgi Equity  Federated Premier

Average diversification

The 3 months correlation between Allianzgi and Federated is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Equity Convertible and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier and Allianzgi Equity 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 Equity Convertible are associated (or correlated) with Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of Allianzgi Equity i.e., Allianzgi Equity and Federated Premier go up and down completely randomly.

Pair Corralation between Allianzgi Equity and Federated Premier

Considering the 90-day investment horizon Allianzgi Equity Convertible is expected to under-perform the Federated Premier. In addition to that, Allianzgi Equity is 1.89 times more volatile than Federated Premier Municipal. It trades about -0.04 of its total potential returns per unit of risk. Federated Premier Municipal is currently generating about -0.02 per unit of volatility. If you would invest  1,136  in Federated Premier Municipal on December 4, 2024 and sell it today you would lose (7.00) from holding Federated Premier Municipal or give up 0.62% of portfolio value over 90 days.

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

Allianzgi Equity Convertible  vs.  Federated Premier Municipal

Allianzgi Equity Con

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allianzgi Equity Convertible has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound forward indicators, Allianzgi Equity is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Federated Premier

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federated Premier Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy primary indicators, Federated Premier is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Allianzgi Equity and Federated Premier

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

The idea behind Allianzgi Equity Convertible and Federated Premier Municipal 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.