Correlation Between Guidemark(r) Small/mid and Pimco Rae

Can any of the company-specific risk be diversified away by investing in both Guidemark(r) Small/mid and Pimco Rae 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 Guidemark(r) Small/mid and Pimco Rae into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guidemark Smallmid Cap and Pimco Rae Worldwide, you can compare the effects of market volatilities on Guidemark(r) Small/mid and Pimco Rae 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 Guidemark(r) Small/mid with a short position of Pimco Rae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark(r) Small/mid and Pimco Rae.

Diversification Opportunities for Guidemark(r) Small/mid and Pimco Rae

-0.71

Correlation Coefficient

Guidemark(r) Small/mid  Pimco Rae

Pay attention - limited upside

The 3 months correlation between Guidemark(r) and Pimco is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Smallmid Cap and Pimco Rae Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Rae Worldwide and Guidemark(r) Small/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 Guidemark Smallmid Cap are associated (or correlated) with Pimco Rae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Rae Worldwide has no effect on the direction of Guidemark(r) Small/mid i.e., Guidemark(r) Small/mid and Pimco Rae go up and down completely randomly.

Pair Corralation between Guidemark(r) Small/mid and Pimco Rae

Assuming the 90 days horizon Guidemark Smallmid Cap is expected to under-perform the Pimco Rae. In addition to that, Guidemark(r) Small/mid is 2.94 times more volatile than Pimco Rae Worldwide. It trades about -0.14 of its total potential returns per unit of risk. Pimco Rae Worldwide is currently generating about 0.18 per unit of volatility. If you would invest  741.00  in Pimco Rae Worldwide on December 25, 2024 and sell it today you would earn a total of  46.00  from holding Pimco Rae Worldwide or generate 6.21% return on investment over 90 days.

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

Guidemark Smallmid Cap  vs.  Pimco Rae Worldwide

Guidemark Smallmid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guidemark Smallmid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's primary indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pimco Rae Worldwide

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Rae Worldwide are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Pimco Rae may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Guidemark(r) Small/mid and Pimco Rae

The main advantage of trading using opposite Guidemark(r) Small/mid and Pimco Rae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark(r) Small/mid position performs unexpectedly, Pimco Rae 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 Rae will offset losses from the drop in Pimco Rae's long position.

The idea behind Guidemark Smallmid Cap and Pimco Rae Worldwide 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.