Correlation Between Pimco Energy and Inflation Protected

Can any of the company-specific risk be diversified away by investing in both Pimco Energy and Inflation Protected 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 Inflation Protected 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 Inflation Protected Bond Fund, you can compare the effects of market volatilities on Pimco Energy and Inflation Protected 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 Inflation Protected. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Energy and Inflation Protected.

Diversification Opportunities for Pimco Energy and Inflation Protected

-0.25

Correlation Coefficient

Pimco Energy  Inflation Protected

Very good diversification

The 3 months correlation between Pimco and Inflation is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Energy Tactical and Inflation Protected Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protected 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 Inflation Protected. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protected has no effect on the direction of Pimco Energy i.e., Pimco Energy and Inflation Protected go up and down completely randomly.

Pair Corralation between Pimco Energy and Inflation Protected

Considering the 90-day investment horizon Pimco Energy Tactical is expected to under-perform the Inflation Protected. In addition to that, Pimco Energy is 8.53 times more volatile than Inflation Protected Bond Fund. It trades about -0.02 of its total potential returns per unit of risk. Inflation Protected Bond Fund is currently generating about 0.0 per unit of volatility. If you would invest  1,030  in Inflation Protected Bond Fund on December 25, 2024 and sell it today you would earn a total of  0.00  from holding Inflation Protected Bond Fund or generate 0.0% return on investment over 90 days.

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

Pimco Energy Tactical  vs.  Inflation Protected Bond Fund

Pimco Energy Tactical

Risk-Adjusted Performance

Very Weak

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

Inflation Protected

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Pimco Energy and Inflation Protected

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

The idea behind Pimco Energy Tactical and Inflation Protected Bond Fund 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.