Correlation Between New York and Virtus AllianzGI

Can any of the company-specific risk be diversified away by investing in both New York and Virtus AllianzGI 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 New York and Virtus AllianzGI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between New York Mortgage and Virtus AllianzGI Convertible, you can compare the effects of market volatilities on New York and Virtus AllianzGI 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 New York with a short position of Virtus AllianzGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and Virtus AllianzGI.

Diversification Opportunities for New York and Virtus AllianzGI

0.29

Correlation Coefficient

New York  Virtus AllianzGI

Modest diversification

The 3 months correlation between New and Virtus is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding New York Mortgage and Virtus AllianzGI Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus AllianzGI Con and New York 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 New York Mortgage are associated (or correlated) with Virtus AllianzGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus AllianzGI Con has no effect on the direction of New York i.e., New York and Virtus AllianzGI go up and down completely randomly.

Pair Corralation between New York and Virtus AllianzGI

Assuming the 90 days horizon New York Mortgage is expected to generate 1.05 times more return on investment than Virtus AllianzGI. However, New York is 1.05 times more volatile than Virtus AllianzGI Convertible. It trades about 0.07 of its potential returns per unit of risk. Virtus AllianzGI Convertible is currently generating about -0.04 per unit of risk. If you would invest  2,205  in New York Mortgage on September 12, 2024 and sell it today you would earn a total of  61.00  from holding New York Mortgage or generate 2.77% return on investment over 90 days.

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

New York Mortgage  vs.  Virtus AllianzGI Convertible

New York Mortgage

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in New York Mortgage are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, New York is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Virtus AllianzGI Con

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus AllianzGI Convertible has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Virtus AllianzGI is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with New York and Virtus AllianzGI

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

The idea behind New York Mortgage and Virtus AllianzGI Convertible 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 Global Correlations module to find global opportunities by holding instruments from different markets.