Correlation Between Pimco California and Tortoise Capital

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

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

Diversification Opportunities for Pimco California and Tortoise Capital

-0.7

Correlation Coefficient

Pimco California  Tortoise Capital

Excellent diversification

The 3 months correlation between Pimco and Tortoise is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pimco California Municipal and Tortoise Capital Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tortoise Capital Series and Pimco California 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 California Municipal are associated (or correlated) with Tortoise Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tortoise Capital Series has no effect on the direction of Pimco California i.e., Pimco California and Tortoise Capital go up and down completely randomly.

Pair Corralation between Pimco California and Tortoise Capital

Considering the 90-day investment horizon Pimco California Municipal is expected to under-perform the Tortoise Capital. But the fund apears to be less risky and, when comparing its historical volatility, Pimco California Municipal is 1.59 times less risky than Tortoise Capital. The fund trades about -0.04 of its potential returns per unit of risk. The Tortoise Capital Series is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,790  in Tortoise Capital Series on September 13, 2024 and sell it today you would earn a total of  239.00  from holding Tortoise Capital Series or generate 13.35% return on investment over 90 days.

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

Pimco California Municipal  vs.  Tortoise Capital Series

Pimco California Mun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco California Municipal has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable fundamental indicators, Pimco California is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Tortoise Capital Series

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tortoise Capital Series are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady basic indicators, Tortoise Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pimco California and Tortoise Capital

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

The idea behind Pimco California Municipal and Tortoise Capital Series 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.