Correlation Between Pimco Dynamic and Main Street

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

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

Diversification Opportunities for Pimco Dynamic and Main Street

-0.02

Correlation Coefficient

Pimco Dynamic  Main Street

Good diversification

The 3 months correlation between Pimco and Main is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Dynamic Income and Main Street Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Street Capital and Pimco Dynamic 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 Dynamic Income are associated (or correlated) with Main Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Street Capital has no effect on the direction of Pimco Dynamic i.e., Pimco Dynamic and Main Street go up and down completely randomly.

Pair Corralation between Pimco Dynamic and Main Street

Considering the 90-day investment horizon Pimco Dynamic is expected to generate 4.66 times less return on investment than Main Street. In addition to that, Pimco Dynamic is 1.27 times more volatile than Main Street Capital. It trades about 0.06 of its total potential returns per unit of risk. Main Street Capital is currently generating about 0.34 per unit of volatility. If you would invest  4,777  in Main Street Capital on September 9, 2024 and sell it today you would earn a total of  752.00  from holding Main Street Capital or generate 15.74% return on investment over 90 days.

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

Pimco Dynamic Income  vs.  Main Street Capital

Pimco Dynamic Income

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong fundamental indicators, Pimco Dynamic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Main Street Capital

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Main Street Capital are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Main Street displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pimco Dynamic and Main Street

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

The idea behind Pimco Dynamic Income and Main Street 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.