Correlation Between Pimco Capital and Gnma Fund

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

Diversification Opportunities for Pimco Capital and Gnma Fund

0.86

Correlation Coefficient

Pimco Capital  Gnma Fund

Very poor diversification

The 3 months correlation between Pimco and Gnma is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Capital Sec and Gnma Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gnma Fund Institutional 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 Gnma Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gnma Fund Institutional has no effect on the direction of Pimco Capital i.e., Pimco Capital and Gnma Fund go up and down completely randomly.

Pair Corralation between Pimco Capital and Gnma Fund

Assuming the 90 days horizon Pimco Capital Sec is expected to generate 0.46 times more return on investment than Gnma Fund. However, Pimco Capital Sec is 2.17 times less risky than Gnma Fund. It trades about 0.18 of its potential returns per unit of risk. Gnma Fund Institutional is currently generating about 0.06 per unit of risk. If you would invest  932.00  in Pimco Capital Sec on December 2, 2024 and sell it today you would earn a total of  17.00  from holding Pimco Capital Sec or generate 1.82% return on investment over 90 days.

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

Pimco Capital Sec  vs.  Gnma Fund Institutional

Pimco Capital Sec

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Capital Sec are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. 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.

Gnma Fund Institutional

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gnma Fund Institutional are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Gnma Fund 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 Gnma Fund

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

The idea behind Pimco Capital Sec and Gnma Fund Institutional 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 Transaction History module to view history of all your transactions and understand their impact on performance.