Correlation Between Pimco Income and Fpa New

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

Diversification Opportunities for Pimco Income and Fpa New

-0.33

Correlation Coefficient

Pimco Income  Fpa New

Very good diversification

The 3 months correlation between Pimco and Fpa is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy and Fpa New Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fpa New Income 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 Fpa New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fpa New Income has no effect on the direction of Pimco Income i.e., Pimco Income and Fpa New go up and down completely randomly.

Pair Corralation between Pimco Income and Fpa New

Considering the 90-day investment horizon Pimco Income Strategy is expected to generate 4.58 times more return on investment than Fpa New. However, Pimco Income is 4.58 times more volatile than Fpa New Income. It trades about 0.07 of its potential returns per unit of risk. Fpa New Income is currently generating about 0.14 per unit of risk. If you would invest  580.00  in Pimco Income Strategy on September 2, 2024 and sell it today you would earn a total of  172.00  from holding Pimco Income Strategy or generate 29.66% return on investment over 90 days.

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

Pimco Income Strategy  vs.  Fpa New Income

Pimco Income Strategy

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 15 (%) 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.

Fpa New Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fpa New Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Fpa New 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 Fpa New

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

The idea behind Pimco Income Strategy and Fpa New 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.