Correlation Between Pace International and Pimco Stocksplus

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

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

Diversification Opportunities for Pace International and Pimco Stocksplus

0.5

Correlation Coefficient

Pace International  Pimco Stocksplus

Very weak diversification

The 3 months correlation between Pace and Pimco is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Pace International Emerging and Pimco Stocksplus Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Stocksplus Short and Pace International 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 Pace International Emerging are associated (or correlated) with Pimco Stocksplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Stocksplus Short has no effect on the direction of Pace International i.e., Pace International and Pimco Stocksplus go up and down completely randomly.

Pair Corralation between Pace International and Pimco Stocksplus

Assuming the 90 days horizon Pace International is expected to generate 1.01 times less return on investment than Pimco Stocksplus. But when comparing it to its historical volatility, Pace International Emerging is 1.03 times less risky than Pimco Stocksplus. It trades about 0.1 of its potential returns per unit of risk. Pimco Stocksplus Short is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  705.00  in Pimco Stocksplus Short on December 28, 2024 and sell it today you would earn a total of  42.00  from holding Pimco Stocksplus Short or generate 5.96% return on investment over 90 days.

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

Pace International Emerging  vs.  Pimco Stocksplus Short

Pace International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pace International Emerging are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Pace International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pimco Stocksplus Short

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Stocksplus Short are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pimco Stocksplus may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Pace International and Pimco Stocksplus

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

The idea behind Pace International Emerging and Pimco Stocksplus Short 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.