Correlation Between Allianzgi Convertible and State Farm

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Can any of the company-specific risk be diversified away by investing in both Allianzgi Convertible and State Farm 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 State Farm 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 State Farm Interim, you can compare the effects of market volatilities on Allianzgi Convertible and State Farm 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 State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianzgi Convertible and State Farm.

Diversification Opportunities for Allianzgi Convertible and State Farm

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Allianzgi and State is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Convertible Income and State Farm Interim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Farm Interim 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 State Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Farm Interim has no effect on the direction of Allianzgi Convertible i.e., Allianzgi Convertible and State Farm go up and down completely randomly.

Pair Corralation between Allianzgi Convertible and State Farm

Assuming the 90 days horizon Allianzgi Convertible Income is expected to generate 254.17 times more return on investment than State Farm. However, Allianzgi Convertible is 254.17 times more volatile than State Farm Interim. It trades about 0.13 of its potential returns per unit of risk. State Farm Interim is currently generating about 0.22 per unit of risk. If you would invest  384.00  in Allianzgi Convertible Income on December 22, 2024 and sell it today you would earn a total of  1,081  from holding Allianzgi Convertible Income or generate 281.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Allianzgi Convertible Income  vs.  State Farm Interim

 Performance 
       Timeline  
Allianzgi Convertible 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Convertible Income are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Allianzgi Convertible showed solid returns over the last few months and may actually be approaching a breakup point.
State Farm Interim 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in State Farm Interim are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, State Farm is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Allianzgi Convertible and State Farm Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Allianzgi Convertible and State Farm

The main advantage of trading using opposite Allianzgi Convertible and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianzgi Convertible position performs unexpectedly, State Farm 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 State Farm will offset losses from the drop in State Farm's long position.
The idea behind Allianzgi Convertible Income and State Farm Interim 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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