Correlation Between Pimco Income and Guggenheim Strategic

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

By analyzing existing cross correlation between Pimco Income Strategy and Guggenheim Strategic Opportunities, you can compare the effects of market volatilities on Pimco Income and Guggenheim Strategic 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 Income with a short position of Guggenheim Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and Guggenheim Strategic.

Diversification Opportunities for Pimco Income and Guggenheim Strategic

0.75

Correlation Coefficient

Pimco Income  Guggenheim Strategic

Poor diversification

The 3 months correlation between Pimco and Guggenheim is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy and Guggenheim Strategic Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Strategic and Pimco Income 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 Income Strategy are associated (or correlated) with Guggenheim Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Strategic has no effect on the direction of Pimco Income i.e., Pimco Income and Guggenheim Strategic go up and down completely randomly.

Pair Corralation between Pimco Income and Guggenheim Strategic

Considering the 90-day investment horizon Pimco Income is expected to generate 1.36 times less return on investment than Guggenheim Strategic. But when comparing it to its historical volatility, Pimco Income Strategy is 1.05 times less risky than Guggenheim Strategic. It trades about 0.15 of its potential returns per unit of risk. Guggenheim Strategic Opportunities is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,492  in Guggenheim Strategic Opportunities on August 30, 2024 and sell it today you would earn a total of  88.00  from holding Guggenheim Strategic Opportunities or generate 5.9% return on investment over 90 days.

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

Pimco Income Strategy  vs.  Guggenheim Strategic Opportuni

Pimco Income Strategy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Pimco Income is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Guggenheim Strategic

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Strategic Opportunities are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Guggenheim Strategic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pimco Income and Guggenheim Strategic

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

The idea behind Pimco Income Strategy and Guggenheim Strategic Opportunities 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.