Correlation Between Clearbridge Energy and AllianzGI Convertible

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

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

Diversification Opportunities for Clearbridge Energy and AllianzGI Convertible

0.81

Correlation Coefficient

Clearbridge Energy  AllianzGI Convertible

Very poor diversification

The 3 months correlation between Clearbridge and AllianzGI is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Energy Mlp and AllianzGI Convertible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianzGI Convertible and Clearbridge Energy 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 Clearbridge Energy Mlp 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 Clearbridge Energy i.e., Clearbridge Energy and AllianzGI Convertible go up and down completely randomly.

Pair Corralation between Clearbridge Energy and AllianzGI Convertible

Considering the 90-day investment horizon Clearbridge Energy Mlp is expected to generate 4.33 times more return on investment than AllianzGI Convertible. However, Clearbridge Energy is 4.33 times more volatile than AllianzGI Convertible Income. It trades about 0.11 of its potential returns per unit of risk. AllianzGI Convertible Income is currently generating about 0.1 per unit of risk. If you would invest  4,078  in Clearbridge Energy Mlp on February 29, 2024 and sell it today you would earn a total of  83.00  from holding Clearbridge Energy Mlp or generate 2.04% return on investment over 90 days.

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

Clearbridge Energy Mlp  vs.  AllianzGI Convertible Income

Clearbridge Energy Mlp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of very fragile primary indicators, Clearbridge Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

AllianzGI Convertible

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AllianzGI Convertible Income are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, AllianzGI Convertible is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Clearbridge Energy and AllianzGI Convertible

The main advantage of trading using opposite Clearbridge Energy and AllianzGI Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Energy 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 Clearbridge Energy Mlp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.