Correlation Between CI Enhanced and PIMCO Investment

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

By analyzing existing cross correlation between CI Enhanced Short and PIMCO Investment Grade, you can compare the effects of market volatilities on CI Enhanced and PIMCO Investment 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 CI Enhanced with a short position of PIMCO Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Enhanced and PIMCO Investment.

Diversification Opportunities for CI Enhanced and PIMCO Investment

0.69

Correlation Coefficient

CI Enhanced  PIMCO Investment

Poor diversification

The 3 months correlation between FSB and PIMCO is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CI Enhanced Short and PIMCO Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Investment Grade and CI Enhanced 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 CI Enhanced Short are associated (or correlated) with PIMCO Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Investment Grade has no effect on the direction of CI Enhanced i.e., CI Enhanced and PIMCO Investment go up and down completely randomly.

Pair Corralation between CI Enhanced and PIMCO Investment

Assuming the 90 days trading horizon CI Enhanced Short is expected to generate 0.34 times more return on investment than PIMCO Investment. However, CI Enhanced Short is 2.96 times less risky than PIMCO Investment. It trades about -0.02 of its potential returns per unit of risk. PIMCO Investment Grade is currently generating about -0.04 per unit of risk. If you would invest  971.00  in CI Enhanced Short on September 13, 2024 and sell it today you would lose (2.00) from holding CI Enhanced Short or give up 0.21% of portfolio value over 90 days.

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

CI Enhanced Short  vs.  PIMCO Investment Grade

CI Enhanced Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CI Enhanced Short has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, CI Enhanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

PIMCO Investment Grade

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PIMCO Investment Grade has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, PIMCO Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CI Enhanced and PIMCO Investment

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

The idea behind CI Enhanced Short and PIMCO Investment Grade 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .