Correlation Between Cardinal Small and Pimco Stocksplus

Can any of the company-specific risk be diversified away by investing in both Cardinal Small and Pimco Stocksplus 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 Cardinal Small and Pimco Stocksplus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cardinal Small Cap and Pimco Stocksplus International, you can compare the effects of market volatilities on Cardinal Small and Pimco Stocksplus 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 Cardinal Small with a short position of Pimco Stocksplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Small and Pimco Stocksplus.

Diversification Opportunities for Cardinal Small and Pimco Stocksplus

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Correlation Coefficient

Cardinal Small  Pimco Stocksplus

Pay attention - limited upside

The 3 months correlation between Cardinal and Pimco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Small Cap and Pimco Stocksplus International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Stocksplus Int and Cardinal Small 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 Cardinal Small Cap are associated (or correlated) with Pimco Stocksplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Stocksplus Int has no effect on the direction of Cardinal Small i.e., Cardinal Small and Pimco Stocksplus go up and down completely randomly.

Pair Corralation between Cardinal Small and Pimco Stocksplus

Assuming the 90 days horizon Cardinal Small Cap is expected to generate 0.98 times more return on investment than Pimco Stocksplus. However, Cardinal Small Cap is 1.02 times less risky than Pimco Stocksplus. It trades about 0.05 of its potential returns per unit of risk. Pimco Stocksplus International is currently generating about -0.02 per unit of risk. If you would invest  1,375  in Cardinal Small Cap on October 4, 2024 and sell it today you would earn a total of  69.00  from holding Cardinal Small Cap or generate 5.02% return on investment over 90 days.

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

Cardinal Small Cap  vs.  Pimco Stocksplus International

Cardinal Small Cap

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Cardinal Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Cardinal Small is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pimco Stocksplus Int

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Stocksplus International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Stocksplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cardinal Small and Pimco Stocksplus

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

The idea behind Cardinal Small Cap and Pimco Stocksplus International 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.