Correlation Between Picton Mahoney and PIMCO Monthly

Can any of the company-specific risk be diversified away by investing in both Picton Mahoney and PIMCO Monthly 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 Picton Mahoney and PIMCO Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Picton Mahoney Fortified and PIMCO Monthly Income, you can compare the effects of market volatilities on Picton Mahoney and PIMCO Monthly 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 Picton Mahoney with a short position of PIMCO Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Picton Mahoney and PIMCO Monthly.

Diversification Opportunities for Picton Mahoney and PIMCO Monthly

-0.09

Correlation Coefficient

Picton Mahoney  PIMCO Monthly

Good diversification

The 3 months correlation between Picton and PIMCO is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Picton Mahoney Fortified and PIMCO Monthly Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Monthly Income and Picton Mahoney 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 Picton Mahoney Fortified are associated (or correlated) with PIMCO Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Monthly Income has no effect on the direction of Picton Mahoney i.e., Picton Mahoney and PIMCO Monthly go up and down completely randomly.

Pair Corralation between Picton Mahoney and PIMCO Monthly

Assuming the 90 days trading horizon Picton Mahoney Fortified is expected to generate 2.13 times more return on investment than PIMCO Monthly. However, Picton Mahoney is 2.13 times more volatile than PIMCO Monthly Income. It trades about 0.1 of its potential returns per unit of risk. PIMCO Monthly Income is currently generating about 0.04 per unit of risk. If you would invest  1,497  in Picton Mahoney Fortified on September 12, 2024 and sell it today you would earn a total of  44.00  from holding Picton Mahoney Fortified or generate 2.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Picton Mahoney Fortified  vs.  PIMCO Monthly Income

Picton Mahoney Fortified

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Picton Mahoney Fortified are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Picton Mahoney is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

PIMCO Monthly Income

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Monthly Income are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, PIMCO Monthly is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Picton Mahoney and PIMCO Monthly

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

The idea behind Picton Mahoney Fortified and PIMCO Monthly Income 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.