Correlation Between Champlain Mid and Pimco Income

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

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

Diversification Opportunities for Champlain Mid and Pimco Income

0.54

Correlation Coefficient

Champlain Mid  Pimco Income

Very weak diversification

The 3 months correlation between Champlain and Pimco is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Mid Cap and Pimco Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income and Champlain Mid 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 Champlain Mid Cap are associated (or correlated) with Pimco Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Income has no effect on the direction of Champlain Mid i.e., Champlain Mid and Pimco Income go up and down completely randomly.

Pair Corralation between Champlain Mid and Pimco Income

Assuming the 90 days horizon Champlain Mid Cap is expected to under-perform the Pimco Income. In addition to that, Champlain Mid is 14.78 times more volatile than Pimco Income Fund. It trades about -0.28 of its total potential returns per unit of risk. Pimco Income Fund is currently generating about -0.43 per unit of volatility. If you would invest  1,068  in Pimco Income Fund on October 9, 2024 and sell it today you would lose (15.00) from holding Pimco Income Fund or give up 1.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Champlain Mid Cap  vs.  Pimco Income Fund

Champlain Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pimco Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Champlain Mid and Pimco Income

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

The idea behind Champlain Mid Cap and Pimco Income Fund 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.