Correlation Between Allianzgi Convertible and Pax Large

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

Diversification Opportunities for Allianzgi Convertible and Pax Large

0.69

Correlation Coefficient

Allianzgi Convertible  Pax Large

Poor diversification

The 3 months correlation between Allianzgi and Pax is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Allianzgi Convertible Income and Pax Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Large Cap 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 Pax Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Large Cap has no effect on the direction of Allianzgi Convertible i.e., Allianzgi Convertible and Pax Large go up and down completely randomly.

Pair Corralation between Allianzgi Convertible and Pax Large

Assuming the 90 days horizon Allianzgi Convertible Income is expected to generate 0.96 times more return on investment than Pax Large. However, Allianzgi Convertible Income is 1.04 times less risky than Pax Large. It trades about 0.57 of its potential returns per unit of risk. Pax Large Cap is currently generating about 0.25 per unit of risk. If you would invest  375.00  in Allianzgi Convertible Income on September 5, 2024 and sell it today you would earn a total of  31.00  from holding Allianzgi Convertible Income or generate 8.27% return on investment over 90 days.

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

Allianzgi Convertible Income  vs.  Pax Large Cap

Allianzgi Convertible

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allianzgi Convertible Income 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 Convertible may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pax Large Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pax Large Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Pax Large 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 Convertible and Pax Large

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

The idea behind Allianzgi Convertible Income and Pax Large Cap 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.