Correlation Between Pimco Moditiesplus and Brown Capital

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

By analyzing existing cross correlation between Pimco Moditiesplus Strategy and The Brown Capital, you can compare the effects of market volatilities on Pimco Moditiesplus and Brown Capital 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 Moditiesplus with a short position of Brown Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Moditiesplus and Brown Capital.

Diversification Opportunities for Pimco Moditiesplus and Brown Capital

-0.16

Correlation Coefficient

Pimco Moditiesplus  Brown Capital

Good diversification

The 3 months correlation between Pimco and Brown is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Moditiesplus Strategy and The Brown Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Capital and Pimco Moditiesplus 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 Moditiesplus Strategy are associated (or correlated) with Brown Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Capital has no effect on the direction of Pimco Moditiesplus i.e., Pimco Moditiesplus and Brown Capital go up and down completely randomly.

Pair Corralation between Pimco Moditiesplus and Brown Capital

Assuming the 90 days horizon Pimco Moditiesplus Strategy is expected to generate 0.09 times more return on investment than Brown Capital. However, Pimco Moditiesplus Strategy is 10.99 times less risky than Brown Capital. It trades about 0.18 of its potential returns per unit of risk. The Brown Capital is currently generating about -0.15 per unit of risk. If you would invest  644.00  in Pimco Moditiesplus Strategy on September 14, 2024 and sell it today you would earn a total of  18.00  from holding Pimco Moditiesplus Strategy or generate 2.8% return on investment over 90 days.

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

Pimco Moditiesplus Strategy  vs.  The Brown Capital

Pimco Moditiesplus

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Moditiesplus Strategy are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Moditiesplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brown Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Brown Capital has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Pimco Moditiesplus and Brown Capital

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

The idea behind Pimco Moditiesplus Strategy and The Brown Capital 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.