Correlation Between Pimco Income and Performance Trust

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

Diversification Opportunities for Pimco Income and Performance Trust

0.32

Correlation Coefficient

Pimco Income  Performance Trust

Weak diversification

The 3 months correlation between Pimco and Performance is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy and Performance Trust Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Trust 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 Performance Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Trust has no effect on the direction of Pimco Income i.e., Pimco Income and Performance Trust go up and down completely randomly.

Pair Corralation between Pimco Income and Performance Trust

Considering the 90-day investment horizon Pimco Income Strategy is expected to generate 1.06 times more return on investment than Performance Trust. However, Pimco Income is 1.06 times more volatile than Performance Trust Strategic. It trades about 0.17 of its potential returns per unit of risk. Performance Trust Strategic is currently generating about 0.03 per unit of risk. If you would invest  734.00  in Pimco Income Strategy on December 3, 2024 and sell it today you would earn a total of  25.00  from holding Pimco Income Strategy or generate 3.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Pimco Income Strategy  vs.  Performance Trust Strategic

Pimco Income Strategy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 13 (%) 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.

Performance Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Trust Strategic are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Performance Trust 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 Performance Trust

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

The idea behind Pimco Income Strategy and Performance Trust Strategic 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.