Correlation Between Allianzgi Mid-cap and Rational/pier

Can any of the company-specific risk be diversified away by investing in both Allianzgi Mid-cap and Rational/pier 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 Mid-cap and Rational/pier into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allianzgi Mid Cap Fund and Rationalpier 88 Convertible, you can compare the effects of market volatilities on Allianzgi Mid-cap and Rational/pier 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 Mid-cap with a short position of Rational/pier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianzgi Mid-cap and Rational/pier.

Diversification Opportunities for Allianzgi Mid-cap and Rational/pier

0.86

Correlation Coefficient

Allianzgi Mid-cap  Rational/pier

Very poor diversification

The 3 months correlation between Allianzgi and Rational/pier is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Mid Cap Fund and Rationalpier 88 Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rationalpier 88 Conv and Allianzgi Mid-cap 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 Mid Cap Fund are associated (or correlated) with Rational/pier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rationalpier 88 Conv has no effect on the direction of Allianzgi Mid-cap i.e., Allianzgi Mid-cap and Rational/pier go up and down completely randomly.

Pair Corralation between Allianzgi Mid-cap and Rational/pier

Assuming the 90 days horizon Allianzgi Mid Cap Fund is expected to under-perform the Rational/pier. In addition to that, Allianzgi Mid-cap is 2.32 times more volatile than Rationalpier 88 Convertible. It trades about -0.22 of its total potential returns per unit of risk. Rationalpier 88 Convertible is currently generating about -0.3 per unit of volatility. If you would invest  1,164  in Rationalpier 88 Convertible on October 7, 2024 and sell it today you would lose (43.00) from holding Rationalpier 88 Convertible or give up 3.69% of portfolio value over 90 days.

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

Allianzgi Mid Cap Fund  vs.  Rationalpier 88 Convertible

Allianzgi Mid Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Mid Cap Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Allianzgi Mid-cap may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Rationalpier 88 Conv

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rationalpier 88 Convertible are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Rational/pier is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allianzgi Mid-cap and Rational/pier

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

The idea behind Allianzgi Mid Cap Fund and Rationalpier 88 Convertible 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.