Correlation Between JPMorgan Core and PIMCO Active

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

By analyzing existing cross correlation between JPMorgan Core Plus and PIMCO Active Bond, you can compare the effects of market volatilities on JPMorgan Core and PIMCO Active 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 JPMorgan Core with a short position of PIMCO Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Core and PIMCO Active.

Diversification Opportunities for JPMorgan Core and PIMCO Active

1.0

Correlation Coefficient

JPMorgan Core  PIMCO Active

No risk reduction

The 3 months correlation between JPMorgan and PIMCO is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Core Plus and PIMCO Active Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Active Bond and JPMorgan Core 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 JPMorgan Core Plus are associated (or correlated) with PIMCO Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Active Bond has no effect on the direction of JPMorgan Core i.e., JPMorgan Core and PIMCO Active go up and down completely randomly.

Pair Corralation between JPMorgan Core and PIMCO Active

Given the investment horizon of 90 days JPMorgan Core Plus is expected to generate 0.82 times more return on investment than PIMCO Active. However, JPMorgan Core Plus is 1.22 times less risky than PIMCO Active. It trades about 0.07 of its potential returns per unit of risk. PIMCO Active Bond is currently generating about 0.04 per unit of risk. If you would invest  4,596  in JPMorgan Core Plus on October 25, 2024 and sell it today you would earn a total of  17.00  from holding JPMorgan Core Plus or generate 0.37% return on investment over 90 days.

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

JPMorgan Core Plus  vs.  PIMCO Active Bond

JPMorgan Core Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan Core Plus has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JPMorgan Core is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

PIMCO Active Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PIMCO Active Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PIMCO Active is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JPMorgan Core and PIMCO Active

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

The idea behind JPMorgan Core Plus and PIMCO Active Bond 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.