Correlation Between Pimco Diversified and Sgi Prudent

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

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

Diversification Opportunities for Pimco Diversified and Sgi Prudent

0.6

Correlation Coefficient

Pimco Diversified  Sgi Prudent

Poor diversification

The 3 months correlation between Pimco and Sgi is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Diversified Income and Sgi Prudent Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sgi Prudent Growth and Pimco Diversified 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 Diversified Income are associated (or correlated) with Sgi Prudent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sgi Prudent Growth has no effect on the direction of Pimco Diversified i.e., Pimco Diversified and Sgi Prudent go up and down completely randomly.

Pair Corralation between Pimco Diversified and Sgi Prudent

Assuming the 90 days horizon Pimco Diversified Income is expected to generate 0.46 times more return on investment than Sgi Prudent. However, Pimco Diversified Income is 2.18 times less risky than Sgi Prudent. It trades about 0.08 of its potential returns per unit of risk. Sgi Prudent Growth is currently generating about 0.03 per unit of risk. If you would invest  856.00  in Pimco Diversified Income on October 11, 2024 and sell it today you would earn a total of  105.00  from holding Pimco Diversified Income or generate 12.27% return on investment over 90 days.

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

Pimco Diversified Income  vs.  Sgi Prudent Growth

Pimco Diversified Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Diversified Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Pimco Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sgi Prudent Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sgi Prudent Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Pimco Diversified and Sgi Prudent

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

The idea behind Pimco Diversified Income and Sgi Prudent Growth 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.