Correlation Between Pimco Energy and Short Oil

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

Diversification Opportunities for Pimco Energy and Short Oil

-0.5

Correlation Coefficient

Pimco Energy  Short Oil

Very good diversification

The 3 months correlation between Pimco and Short is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Energy Tactical and Short Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Oil Gas 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 Short Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Oil Gas has no effect on the direction of Pimco Energy i.e., Pimco Energy and Short Oil go up and down completely randomly.

Pair Corralation between Pimco Energy and Short Oil

Considering the 90-day investment horizon Pimco Energy Tactical is expected to generate 2.86 times more return on investment than Short Oil. However, Pimco Energy is 2.86 times more volatile than Short Oil Gas. It trades about 0.0 of its potential returns per unit of risk. Short Oil Gas is currently generating about -0.13 per unit of risk. If you would invest  2,472  in Pimco Energy Tactical on December 20, 2024 and sell it today you would lose (74.00) from holding Pimco Energy Tactical or give up 2.99% of portfolio value over 90 days.

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

Pimco Energy Tactical  vs.  Short Oil Gas

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.

Short Oil Gas

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Pimco Energy Tactical and Short Oil Gas 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.