Correlation Between PIMCO Enhanced and JPMorgan

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

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

Diversification Opportunities for PIMCO Enhanced and JPMorgan

-0.12

Correlation Coefficient

PIMCO Enhanced  JPMorgan

Good diversification

The 3 months correlation between PIMCO and JPMorgan is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Enhanced Low and JPMorgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan and PIMCO 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 PIMCO Enhanced Low are associated (or correlated) with JPMorgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan has no effect on the direction of PIMCO Enhanced i.e., PIMCO Enhanced and JPMorgan go up and down completely randomly.

Pair Corralation between PIMCO Enhanced and JPMorgan

Given the investment horizon of 90 days PIMCO Enhanced Low is expected to generate 1.04 times more return on investment than JPMorgan. However, PIMCO Enhanced is 1.04 times more volatile than JPMorgan. It trades about 0.07 of its potential returns per unit of risk. JPMorgan is currently generating about -0.14 per unit of risk. If you would invest  9,458  in PIMCO Enhanced Low on September 12, 2024 and sell it today you would earn a total of  56.00  from holding PIMCO Enhanced Low or generate 0.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	46.03%
Values	Daily Returns

PIMCO Enhanced Low  vs.  JPMorgan

PIMCO Enhanced Low

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Enhanced Low are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, PIMCO Enhanced is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

JPMorgan

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PIMCO Enhanced and JPMorgan

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

The idea behind PIMCO Enhanced Low and JPMorgan 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.