Correlation Between AllianzGI Convertible and Berkshire Hathaway

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

Diversification Opportunities for AllianzGI Convertible and Berkshire Hathaway

-0.15

Correlation Coefficient

AllianzGI Convertible  Berkshire Hathaway

Good diversification

The 3 months correlation between AllianzGI and Berkshire is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding AllianzGI Convertible Income and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway 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 Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of AllianzGI Convertible i.e., AllianzGI Convertible and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between AllianzGI Convertible and Berkshire Hathaway

Considering the 90-day investment horizon AllianzGI Convertible is expected to generate 1.13 times less return on investment than Berkshire Hathaway. But when comparing it to its historical volatility, AllianzGI Convertible Income is 2.28 times less risky than Berkshire Hathaway. It trades about 0.13 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  40,339  in Berkshire Hathaway on March 3, 2024 and sell it today you would earn a total of  1,101  from holding Berkshire Hathaway or generate 2.73% return on investment over 90 days.

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

AllianzGI Convertible Income  vs.  Berkshire Hathaway

AllianzGI Convertible

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AllianzGI Convertible Income are ranked lower than 9 (%) 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.

Berkshire Hathaway

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Berkshire Hathaway 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 Berkshire Hathaway

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

The idea behind AllianzGI Convertible Income and Berkshire Hathaway 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.