Correlation Between Main Street and Pimco Dynamic

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Can any of the company-specific risk be diversified away by investing in both Main Street and Pimco Dynamic 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 Main Street and Pimco Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Capital and Pimco Dynamic Income, you can compare the effects of market volatilities on Main Street and Pimco Dynamic 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 Main Street with a short position of Pimco Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Pimco Dynamic.

Diversification Opportunities for Main Street and Pimco Dynamic

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Main and Pimco is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and Pimco Dynamic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Dynamic Income and Main Street 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 Main Street Capital are associated (or correlated) with Pimco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Dynamic Income has no effect on the direction of Main Street i.e., Main Street and Pimco Dynamic go up and down completely randomly.

Pair Corralation between Main Street and Pimco Dynamic

Given the investment horizon of 90 days Main Street Capital is expected to generate 1.1 times more return on investment than Pimco Dynamic. However, Main Street is 1.1 times more volatile than Pimco Dynamic Income. It trades about 0.13 of its potential returns per unit of risk. Pimco Dynamic Income is currently generating about 0.07 per unit of risk. If you would invest  3,030  in Main Street Capital on September 10, 2024 and sell it today you would earn a total of  2,499  from holding Main Street Capital or generate 82.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

Main Street Capital  vs.  Pimco Dynamic Income

 Performance 
       Timeline  
Main Street Capital 

Risk-Adjusted Performance

26 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Main Street Capital are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Main Street displayed solid returns over the last few months and may actually be approaching a breakup point.
Pimco Dynamic Income 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong fundamental indicators, Pimco Dynamic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Main Street and Pimco Dynamic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Main Street and Pimco Dynamic

The main advantage of trading using opposite Main Street and Pimco Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, Pimco Dynamic 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 Dynamic will offset losses from the drop in Pimco Dynamic's long position.
The idea behind Main Street Capital and Pimco Dynamic Income 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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