Correlation Between PIMCO Monthly and TD Index

Can any of the company-specific risk be diversified away by investing in both PIMCO Monthly and TD Index 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 TD Index 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 TD Index Fund E, you can compare the effects of market volatilities on PIMCO Monthly and TD Index 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 TD Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Monthly and TD Index.

Diversification Opportunities for PIMCO Monthly and TD Index

-0.48

Correlation Coefficient

PIMCO Monthly  TD Index

Very good diversification

The 3 months correlation between PIMCO and TDB902 is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Monthly Income and TD Index Fund E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Index Fund 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 TD Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Index Fund has no effect on the direction of PIMCO Monthly i.e., PIMCO Monthly and TD Index go up and down completely randomly.

Pair Corralation between PIMCO Monthly and TD Index

Assuming the 90 days trading horizon PIMCO Monthly Income is expected to under-perform the TD Index. But the fund apears to be less risky and, when comparing its historical volatility, PIMCO Monthly Income is 2.95 times less risky than TD Index. The fund trades about -0.49 of its potential returns per unit of risk. The TD Index Fund E is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  15,204  in TD Index Fund E on October 9, 2024 and sell it today you would lose (165.00) from holding TD Index Fund E or give up 1.09% of portfolio value over 90 days.

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

PIMCO Monthly Income  vs.  TD Index Fund E

PIMCO Monthly Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PIMCO Monthly Income has generated negative risk-adjusted returns adding no value to fund investors. 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.

TD Index Fund

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TD Index Fund E are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak fundamental drivers, TD Index may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PIMCO Monthly and TD Index

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

The idea behind PIMCO Monthly Income and TD Index Fund E 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.