Correlation Between NYSE Composite and Aa Pimco

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

By analyzing existing cross correlation between NYSE Composite and Aa Pimco Tr, you can compare the effects of market volatilities on NYSE Composite and Aa Pimco 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 NYSE Composite with a short position of Aa Pimco. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Aa Pimco.

Diversification Opportunities for NYSE Composite and Aa Pimco

-0.73

Correlation Coefficient

NYSE Composite  Aa Pimco

Pay attention - limited upside

The 3 months correlation between NYSE and PQTIX is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Aa Pimco Tr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aa Pimco Tr and NYSE Composite 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 NYSE Composite are associated (or correlated) with Aa Pimco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aa Pimco Tr has no effect on the direction of NYSE Composite i.e., NYSE Composite and Aa Pimco go up and down completely randomly.

Pair Corralation between NYSE Composite and Aa Pimco

Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Aa Pimco. In addition to that, NYSE Composite is 2.19 times more volatile than Aa Pimco Tr. It trades about -0.26 of its total potential returns per unit of risk. Aa Pimco Tr is currently generating about -0.25 per unit of volatility. If you would invest  1,022  in Aa Pimco Tr on December 10, 2024 and sell it today you would lose (20.00) from holding Aa Pimco Tr or give up 1.96% of portfolio value over 90 days.

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

NYSE Composite  vs.  Aa Pimco Tr

Pair Trading with NYSE Composite and Aa Pimco

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

The idea behind NYSE Composite and Aa Pimco Tr 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.