Correlation Between Pimco Equity and Icon Financial

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

By analyzing existing cross correlation between Pimco Equity Series and Icon Financial Fund, you can compare the effects of market volatilities on Pimco Equity and Icon Financial 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 Equity with a short position of Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Equity and Icon Financial.

Diversification Opportunities for Pimco Equity and Icon Financial

0.75

Correlation Coefficient

Pimco Equity  Icon Financial

Poor diversification

The 3 months correlation between Pimco and Icon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Equity Series and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial and Pimco Equity 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 Equity Series are associated (or correlated) with Icon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Financial has no effect on the direction of Pimco Equity i.e., Pimco Equity and Icon Financial go up and down completely randomly.

Pair Corralation between Pimco Equity and Icon Financial

Assuming the 90 days horizon Pimco Equity Series is expected to generate 0.82 times more return on investment than Icon Financial. However, Pimco Equity Series is 1.23 times less risky than Icon Financial. It trades about 0.02 of its potential returns per unit of risk. Icon Financial Fund is currently generating about -0.06 per unit of risk. If you would invest  1,294  in Pimco Equity Series on December 19, 2024 and sell it today you would earn a total of  11.00  from holding Pimco Equity Series or generate 0.85% return on investment over 90 days.

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

Pimco Equity Series  vs.  Icon Financial Fund

Pimco Equity Series

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Equity Series are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Pimco Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Icon Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Icon Financial Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Icon Financial 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 Equity and Icon Financial

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

The idea behind Pimco Equity Series and Icon Financial Fund 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.