Correlation Between Pimco Small and Pimco International

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

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

Diversification Opportunities for Pimco Small and Pimco International

0.21

Correlation Coefficient

Pimco Small  Pimco International

Modest diversification

The 3 months correlation between Pimco and Pimco is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Small Cap and Pimco International Stocksplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco International and Pimco Small 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 Small Cap are associated (or correlated) with Pimco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco International has no effect on the direction of Pimco Small i.e., Pimco Small and Pimco International go up and down completely randomly.

Pair Corralation between Pimco Small and Pimco International

Assuming the 90 days horizon Pimco Small Cap is expected to generate 2.18 times more return on investment than Pimco International. However, Pimco Small is 2.18 times more volatile than Pimco International Stocksplus. It trades about 0.08 of its potential returns per unit of risk. Pimco International Stocksplus is currently generating about 0.08 per unit of risk. If you would invest  746.00  in Pimco Small Cap on September 17, 2024 and sell it today you would earn a total of  49.00  from holding Pimco Small Cap or generate 6.57% return on investment over 90 days.

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

Pimco Small Cap  vs.  Pimco International Stocksplus

Pimco Small Cap

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Small Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pimco Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pimco International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco International Stocksplus are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco International 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 Small and Pimco International

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

The idea behind Pimco Small Cap and Pimco International Stocksplus 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.