Correlation Between Pimco Income and Frontier Mfg

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

Diversification Opportunities for Pimco Income and Frontier Mfg

0.82

Correlation Coefficient

Pimco Income  Frontier Mfg

Very poor diversification

The 3 months correlation between Pimco and Frontier is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy and Frontier Mfg Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Mfg Global 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 Frontier Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Mfg Global has no effect on the direction of Pimco Income i.e., Pimco Income and Frontier Mfg go up and down completely randomly.

Pair Corralation between Pimco Income and Frontier Mfg

Considering the 90-day investment horizon Pimco Income Strategy is expected to generate 0.43 times more return on investment than Frontier Mfg. However, Pimco Income Strategy is 2.33 times less risky than Frontier Mfg. It trades about 0.25 of its potential returns per unit of risk. Frontier Mfg Global is currently generating about 0.08 per unit of risk. If you would invest  722.00  in Pimco Income Strategy on December 29, 2024 and sell it today you would earn a total of  31.00  from holding Pimco Income Strategy or generate 4.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Pimco Income Strategy  vs.  Frontier Mfg Global

Pimco Income Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy technical and fundamental indicators, Pimco Income is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Frontier Mfg Global

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Frontier Mfg Global are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Frontier Mfg 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 Income and Frontier Mfg

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

The idea behind Pimco Income Strategy and Frontier Mfg Global 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.