Correlation Between Pimco Energy and Oil Gas

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

By analyzing existing cross correlation between Pimco Energy Tactical and Oil Gas Ultrasector, you can compare the effects of market volatilities on Pimco Energy and Oil Gas 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 Energy with a short position of Oil Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Energy and Oil Gas.

Diversification Opportunities for Pimco Energy and Oil Gas

0.02

Correlation Coefficient

Pimco Energy  Oil Gas

Significant diversification

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

Pair Corralation between Pimco Energy and Oil Gas

Considering the 90-day investment horizon Pimco Energy Tactical is expected to generate 1.01 times more return on investment than Oil Gas. However, Pimco Energy is 1.01 times more volatile than Oil Gas Ultrasector. It trades about 0.2 of its potential returns per unit of risk. Oil Gas Ultrasector is currently generating about -0.2 per unit of risk. If you would invest  2,336  in Pimco Energy Tactical on October 7, 2024 and sell it today you would earn a total of  293.00  from holding Pimco Energy Tactical or generate 12.54% return on investment over 90 days.

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

Pimco Energy Tactical  vs.  Oil Gas Ultrasector

Pimco Energy Tactical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Energy Tactical are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Pimco Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Oil Gas Ultrasector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oil Gas Ultrasector has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Energy and Oil Gas

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

The idea behind Pimco Energy Tactical and Oil Gas Ultrasector 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 Anywhere module to track or share privately all of your investments from the convenience of any device.