Correlation Between Pimco Fundamental and Total Return

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

By analyzing existing cross correlation between Pimco Fundamental Advantage and Total Return Fund, you can compare the effects of market volatilities on Pimco Fundamental and Total Return 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 Fundamental with a short position of Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Fundamental and Total Return.

Diversification Opportunities for Pimco Fundamental and Total Return

0.9

Correlation Coefficient

Pimco Fundamental  Total Return

Almost no diversification

The 3 months correlation between Pimco and Total is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Fundamental Advantage and Total Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return and Pimco Fundamental 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 Fundamental Advantage are associated (or correlated) with Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return has no effect on the direction of Pimco Fundamental i.e., Pimco Fundamental and Total Return go up and down completely randomly.

Pair Corralation between Pimco Fundamental and Total Return

Assuming the 90 days horizon Pimco Fundamental Advantage is expected to generate 2.01 times more return on investment than Total Return. However, Pimco Fundamental is 2.01 times more volatile than Total Return Fund. It trades about 0.16 of its potential returns per unit of risk. Total Return Fund is currently generating about 0.12 per unit of risk. If you would invest  747.00  in Pimco Fundamental Advantage on December 28, 2024 and sell it today you would earn a total of  48.00  from holding Pimco Fundamental Advantage or generate 6.43% return on investment over 90 days.

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

Pimco Fundamental Advantage  vs.  Total Return Fund

Pimco Fundamental

Risk-Adjusted Performance

Good

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

Total Return

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Total Return Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Total Return 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 Fundamental and Total Return

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

The idea behind Pimco Fundamental Advantage and Total Return 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.