Correlation Between Allianzgi Mid-cap and High-yield Municipal

Can any of the company-specific risk be diversified away by investing in both Allianzgi Mid-cap and High-yield Municipal 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 Mid-cap and High-yield Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allianzgi Mid Cap Fund and High Yield Municipal Fund, you can compare the effects of market volatilities on Allianzgi Mid-cap and High-yield Municipal 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 Mid-cap with a short position of High-yield Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianzgi Mid-cap and High-yield Municipal.

Diversification Opportunities for Allianzgi Mid-cap and High-yield Municipal

0.04

Correlation Coefficient

Allianzgi Mid-cap  High-yield Municipal

Significant diversification

The 3 months correlation between Allianzgi and High-yield is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Mid Cap Fund and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal and Allianzgi Mid-cap 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 Mid Cap Fund are associated (or correlated) with High-yield Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of Allianzgi Mid-cap i.e., Allianzgi Mid-cap and High-yield Municipal go up and down completely randomly.

Pair Corralation between Allianzgi Mid-cap and High-yield Municipal

Assuming the 90 days horizon Allianzgi Mid Cap Fund is expected to generate 3.32 times more return on investment than High-yield Municipal. However, Allianzgi Mid-cap is 3.32 times more volatile than High Yield Municipal Fund. It trades about 0.29 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.08 per unit of risk. If you would invest  404.00  in Allianzgi Mid Cap Fund on September 2, 2024 and sell it today you would earn a total of  79.00  from holding Allianzgi Mid Cap Fund or generate 19.55% return on investment over 90 days.

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

Allianzgi Mid Cap Fund  vs.  High Yield Municipal Fund

Allianzgi Mid Cap

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Mid Cap Fund are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Allianzgi Mid-cap showed solid returns over the last few months and may actually be approaching a breakup point.

High Yield Municipal

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in High Yield Municipal Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, High-yield Municipal 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 Mid-cap and High-yield Municipal

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

The idea behind Allianzgi Mid Cap Fund and High Yield Municipal Fund 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 Valuation module to check real value of public entities based on technical and fundamental data.