Correlation Between Pimco Short and Palmer Square

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

By analyzing existing cross correlation between Pimco Short Asset and Palmer Square Ssi, you can compare the effects of market volatilities on Pimco Short and Palmer Square 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 Short with a short position of Palmer Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Short and Palmer Square.

Diversification Opportunities for Pimco Short and Palmer Square

0.92

Correlation Coefficient

Pimco Short  Palmer Square

Almost no diversification

The 3 months correlation between Pimco and Palmer is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Short Asset and Palmer Square Ssi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palmer Square Ssi and Pimco Short 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 Short Asset are associated (or correlated) with Palmer Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palmer Square Ssi has no effect on the direction of Pimco Short i.e., Pimco Short and Palmer Square go up and down completely randomly.

Pair Corralation between Pimco Short and Palmer Square

Assuming the 90 days horizon Pimco Short is expected to generate 2.67 times less return on investment than Palmer Square. But when comparing it to its historical volatility, Pimco Short Asset is 1.07 times less risky than Palmer Square. It trades about 0.19 of its potential returns per unit of risk. Palmer Square Ssi is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest  973.00  in Palmer Square Ssi on September 5, 2024 and sell it today you would earn a total of  24.00  from holding Palmer Square Ssi or generate 2.47% return on investment over 90 days.

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

Pimco Short Asset  vs.  Palmer Square Ssi

Pimco Short Asset

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Short Asset are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pimco Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Palmer Square Ssi

Risk-Adjusted Performance

37 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Palmer Square Ssi are ranked lower than 37 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Palmer Square is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pimco Short and Palmer Square

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

The idea behind Pimco Short Asset and Palmer Square Ssi 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..