Correlation Between PIMCO Monthly and RBC Vision

Can any of the company-specific risk be diversified away by investing in both PIMCO Monthly and RBC Vision 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 PIMCO Monthly and RBC Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PIMCO Monthly Income and RBC Vision Global, you can compare the effects of market volatilities on PIMCO Monthly and RBC Vision 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 PIMCO Monthly with a short position of RBC Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Monthly and RBC Vision.

Diversification Opportunities for PIMCO Monthly and RBC Vision

-0.43

Correlation Coefficient

PIMCO Monthly  RBC Vision

Very good diversification

The 3 months correlation between PIMCO and RBC is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Monthly Income and RBC Vision Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Vision Global and PIMCO Monthly 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 PIMCO Monthly Income are associated (or correlated) with RBC Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Vision Global has no effect on the direction of PIMCO Monthly i.e., PIMCO Monthly and RBC Vision go up and down completely randomly.

Pair Corralation between PIMCO Monthly and RBC Vision

Assuming the 90 days trading horizon PIMCO Monthly Income is expected to generate 0.22 times more return on investment than RBC Vision. However, PIMCO Monthly Income is 4.64 times less risky than RBC Vision. It trades about 0.14 of its potential returns per unit of risk. RBC Vision Global is currently generating about -0.08 per unit of risk. If you would invest  1,232  in PIMCO Monthly Income on December 24, 2024 and sell it today you would earn a total of  20.00  from holding PIMCO Monthly Income or generate 1.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

PIMCO Monthly Income  vs.  RBC Vision Global

PIMCO Monthly Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Monthly Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, PIMCO Monthly is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

RBC Vision Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days RBC Vision Global has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong technical and fundamental indicators, RBC Vision is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PIMCO Monthly and RBC Vision

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

The idea behind PIMCO Monthly Income and RBC Vision Global 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.