Correlation Between BlackRock ESG and Allianzgi Convertible

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

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

Diversification Opportunities for BlackRock ESG and Allianzgi Convertible

0.75

Correlation Coefficient

BlackRock ESG  Allianzgi Convertible

Poor diversification

The 3 months correlation between BlackRock and Allianzgi is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock ESG Capital and Allianzgi Convertible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Convertible and BlackRock ESG 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 BlackRock ESG Capital 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 BlackRock ESG i.e., BlackRock ESG and Allianzgi Convertible go up and down completely randomly.

Pair Corralation between BlackRock ESG and Allianzgi Convertible

Given the investment horizon of 90 days BlackRock ESG is expected to generate 1.67 times less return on investment than Allianzgi Convertible. But when comparing it to its historical volatility, BlackRock ESG Capital is 1.07 times less risky than Allianzgi Convertible. It trades about 0.09 of its potential returns per unit of risk. Allianzgi Convertible Income is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  306.00  in Allianzgi Convertible Income on September 15, 2024 and sell it today you would earn a total of  55.00  from holding Allianzgi Convertible Income or generate 17.97% return on investment over 90 days.

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

BlackRock ESG Capital  vs.  Allianzgi Convertible Income

BlackRock ESG Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock ESG Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BlackRock ESG is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Allianzgi Convertible

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Convertible Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile fundamental indicators, Allianzgi Convertible may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BlackRock ESG and Allianzgi Convertible

The main advantage of trading using opposite BlackRock ESG and Allianzgi Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock ESG 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 BlackRock ESG Capital 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.