Correlation Between Thornburg Value and Allianzgi Convertible

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

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

Diversification Opportunities for Thornburg Value and Allianzgi Convertible

0.96

Correlation Coefficient

Thornburg Value  Allianzgi Convertible

Almost no diversification

The 3 months correlation between Thornburg and Allianzgi is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Value Fund and Allianzgi Convertible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Convertible and Thornburg Value 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 Thornburg Value Fund 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 Thornburg Value i.e., Thornburg Value and Allianzgi Convertible go up and down completely randomly.

Pair Corralation between Thornburg Value and Allianzgi Convertible

Assuming the 90 days horizon Thornburg Value Fund is expected to generate 1.62 times more return on investment than Allianzgi Convertible. However, Thornburg Value is 1.62 times more volatile than Allianzgi Convertible Income. It trades about 0.06 of its potential returns per unit of risk. Allianzgi Convertible Income is currently generating about 0.07 per unit of risk. If you would invest  8,186  in Thornburg Value Fund on October 9, 2024 and sell it today you would earn a total of  316.00  from holding Thornburg Value Fund or generate 3.86% return on investment over 90 days.

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

Thornburg Value Fund  vs.  Allianzgi Convertible Income

Thornburg Value

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Value Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Thornburg Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Allianzgi Convertible

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Convertible Income are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Allianzgi Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thornburg Value and Allianzgi Convertible

The main advantage of trading using opposite Thornburg Value and Allianzgi Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg Value 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 Thornburg Value Fund 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.