Correlation Between European Equity and Allianzgi Convertible

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

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

Diversification Opportunities for European Equity and Allianzgi Convertible

-0.78

Correlation Coefficient

European Equity  Allianzgi Convertible

Pay attention - limited upside

The 3 months correlation between European and Allianzgi is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding European Equity Closed and Allianzgi Convertible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Convertible and European Equity 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 European Equity Closed 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 European Equity i.e., European Equity and Allianzgi Convertible go up and down completely randomly.

Pair Corralation between European Equity and Allianzgi Convertible

Considering the 90-day investment horizon European Equity Closed is expected to under-perform the Allianzgi Convertible. But the fund apears to be less risky and, when comparing its historical volatility, European Equity Closed is 1.55 times less risky than Allianzgi Convertible. The fund trades about -0.16 of its potential returns per unit of risk. The Allianzgi Convertible Income is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  301.00  in Allianzgi Convertible Income on September 5, 2024 and sell it today you would earn a total of  32.00  from holding Allianzgi Convertible Income or generate 10.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

European Equity Closed  vs.  Allianzgi Convertible Income

European Equity Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Equity Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Allianzgi Convertible

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Convertible Income are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly abnormal fundamental indicators, Allianzgi Convertible showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with European Equity and Allianzgi Convertible

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

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.