Correlation Between Allianzgi Convertible and Prudential Jennison

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

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

Diversification Opportunities for Allianzgi Convertible and Prudential Jennison

0.64

Correlation Coefficient

Allianzgi Convertible  Prudential Jennison

Poor diversification

The 3 months correlation between Allianzgi and Prudential is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Convertible Income and Prudential Jennison Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison Mid and Allianzgi Convertible 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 Convertible Income are associated (or correlated) with Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison Mid has no effect on the direction of Allianzgi Convertible i.e., Allianzgi Convertible and Prudential Jennison go up and down completely randomly.

Pair Corralation between Allianzgi Convertible and Prudential Jennison

Assuming the 90 days horizon Allianzgi Convertible Income is expected to generate 0.66 times more return on investment than Prudential Jennison. However, Allianzgi Convertible Income is 1.53 times less risky than Prudential Jennison. It trades about 0.07 of its potential returns per unit of risk. Prudential Jennison Mid Cap is currently generating about 0.0 per unit of risk. If you would invest  372.00  in Allianzgi Convertible Income on October 10, 2024 and sell it today you would earn a total of  12.00  from holding Allianzgi Convertible Income or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Allianzgi Convertible Income  vs.  Prudential Jennison Mid Cap

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.

Prudential Jennison Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Jennison Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Prudential Jennison 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 Convertible and Prudential Jennison

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

The idea behind Allianzgi Convertible Income and Prudential Jennison Mid Cap 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.