Correlation Between Allianzgi Diversified and Blue Chip

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

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

Diversification Opportunities for Allianzgi Diversified and Blue Chip

0.86

Correlation Coefficient

Allianzgi Diversified  Blue Chip

Very poor diversification

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

Pair Corralation between Allianzgi Diversified and Blue Chip

Assuming the 90 days horizon Allianzgi Diversified Income is expected to generate 0.69 times more return on investment than Blue Chip. However, Allianzgi Diversified Income is 1.44 times less risky than Blue Chip. It trades about -0.27 of its potential returns per unit of risk. Blue Chip Fund is currently generating about -0.22 per unit of risk. If you would invest  2,387  in Allianzgi Diversified Income on October 8, 2024 and sell it today you would lose (134.00) from holding Allianzgi Diversified Income or give up 5.61% of portfolio value over 90 days.

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

Allianzgi Diversified Income  vs.  Blue Chip Fund

Allianzgi Diversified

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Diversified Income are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Allianzgi Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blue Chip Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Chip Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Blue Chip 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 Diversified and Blue Chip

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

The idea behind Allianzgi Diversified Income and Blue Chip Fund 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.