Correlation Between Pimco Capital and Palmer Square

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

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

Diversification Opportunities for Pimco Capital and Palmer Square

0.35

Correlation Coefficient

Pimco Capital  Palmer Square

Weak diversification

The 3 months correlation between Pimco and Palmer is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Capital Sec and Palmer Square Ssi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palmer Square Ssi and Pimco Capital 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 Capital Sec are associated (or correlated) with Palmer Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palmer Square Ssi has no effect on the direction of Pimco Capital i.e., Pimco Capital and Palmer Square go up and down completely randomly.

Pair Corralation between Pimco Capital and Palmer Square

Assuming the 90 days horizon Pimco Capital Sec is expected to generate about the same return on investment as Palmer Square Ssi. However, Pimco Capital is 1.4 times more volatile than Palmer Square Ssi. It trades about 0.0 of its potential returns per unit of risk. Palmer Square Ssi is currently producing about 0.0 per unit of risk. If you would invest  999.00  in Palmer Square Ssi on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Palmer Square Ssi or generate 0.0% return on investment over 90 days.

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

Pimco Capital Sec  vs.  Palmer Square Ssi

Pimco Capital Sec

Risk-Adjusted Performance

0 of 100

Very Weak

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

Palmer Square Ssi

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Palmer Square Ssi are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Palmer Square 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 Capital and Palmer Square

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

The idea behind Pimco Capital Sec and Palmer Square Ssi 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.