Correlation Between Pimco Fundamental and Pimco Rae

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

Diversification Opportunities for Pimco Fundamental and Pimco Rae

0.94

Correlation Coefficient

Pimco Fundamental  Pimco Rae

Almost no diversification

The 3 months correlation between Pimco and Pimco is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Fundamental Advantage and Pimco Rae Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Rae Fundamental 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 Pimco Rae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Rae Fundamental has no effect on the direction of Pimco Fundamental i.e., Pimco Fundamental and Pimco Rae go up and down completely randomly.

Pair Corralation between Pimco Fundamental and Pimco Rae

Assuming the 90 days horizon Pimco Fundamental Advantage is expected to generate 0.54 times more return on investment than Pimco Rae. However, Pimco Fundamental Advantage is 1.87 times less risky than Pimco Rae. It trades about -0.24 of its potential returns per unit of risk. Pimco Rae Fundamental is currently generating about -0.42 per unit of risk. If you would invest  787.00  in Pimco Fundamental Advantage on October 10, 2024 and sell it today you would lose (19.00) from holding Pimco Fundamental Advantage or give up 2.41% of portfolio value over 90 days.

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

Pimco Fundamental Advantage  vs.  Pimco Rae Fundamental

Pimco Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pimco Rae Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Rae Fundamental has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Pimco Fundamental and Pimco Rae

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

The idea behind Pimco Fundamental Advantage and Pimco Rae Fundamental 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.