Correlation Between Ionic Inflation and PIMCO Broad

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

By analyzing existing cross correlation between Ionic Inflation Protection and PIMCO Broad TIPS, you can compare the effects of market volatilities on Ionic Inflation and PIMCO Broad 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 Ionic Inflation with a short position of PIMCO Broad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ionic Inflation and PIMCO Broad.

Diversification Opportunities for Ionic Inflation and PIMCO Broad

-0.86

Correlation Coefficient

Ionic Inflation  PIMCO Broad

Pay attention - limited upside

The 3 months correlation between Ionic and PIMCO is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ionic Inflation Protection and PIMCO Broad TIPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Broad TIPS and Ionic Inflation 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 Ionic Inflation Protection are associated (or correlated) with PIMCO Broad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Broad TIPS has no effect on the direction of Ionic Inflation i.e., Ionic Inflation and PIMCO Broad go up and down completely randomly.

Pair Corralation between Ionic Inflation and PIMCO Broad

Given the investment horizon of 90 days Ionic Inflation Protection is expected to generate 0.98 times more return on investment than PIMCO Broad. However, Ionic Inflation Protection is 1.02 times less risky than PIMCO Broad. It trades about 0.19 of its potential returns per unit of risk. PIMCO Broad TIPS is currently generating about -0.17 per unit of risk. If you would invest  1,885  in Ionic Inflation Protection on October 15, 2024 and sell it today you would earn a total of  57.00  from holding Ionic Inflation Protection or generate 3.02% return on investment over 90 days.

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

Ionic Inflation Protection  vs.  PIMCO Broad TIPS

Ionic Inflation Prot

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ionic Inflation Protection are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Ionic Inflation is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

PIMCO Broad TIPS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ionic Inflation and PIMCO Broad

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

The idea behind Ionic Inflation Protection and PIMCO Broad TIPS 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.