Correlation Between Pimco Preferred and 11041RAL2

Can any of the company-specific risk be diversified away by investing in both Pimco Preferred and 11041RAL2 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 Preferred and 11041RAL2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pimco Preferred And and BALN 75 01 JUL 27, you can compare the effects of market volatilities on Pimco Preferred and 11041RAL2 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 Preferred with a short position of 11041RAL2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Preferred and 11041RAL2.

Diversification Opportunities for Pimco Preferred and 11041RAL2

0.43

Correlation Coefficient

Pimco Preferred  11041RAL2

Very weak diversification

The 3 months correlation between Pimco and 11041RAL2 is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Preferred And and BALN 75 01 JUL 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BALN 75 01 and Pimco Preferred 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 Preferred And are associated (or correlated) with 11041RAL2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BALN 75 01 has no effect on the direction of Pimco Preferred i.e., Pimco Preferred and 11041RAL2 go up and down completely randomly.

Pair Corralation between Pimco Preferred and 11041RAL2

Assuming the 90 days horizon Pimco Preferred And is expected to generate 1.24 times more return on investment than 11041RAL2. However, Pimco Preferred is 1.24 times more volatile than BALN 75 01 JUL 27. It trades about -0.43 of its potential returns per unit of risk. BALN 75 01 JUL 27 is currently generating about -0.58 per unit of risk. If you would invest  945.00  in Pimco Preferred And on October 12, 2024 and sell it today you would lose (26.00) from holding Pimco Preferred And or give up 2.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	25.0%
Values	Daily Returns

Pimco Preferred And  vs.  BALN 75 01 JUL 27

Pimco Preferred And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Preferred And has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Preferred is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BALN 75 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BALN 75 01 JUL 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 11041RAL2 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pimco Preferred and 11041RAL2

The main advantage of trading using opposite Pimco Preferred and 11041RAL2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Preferred position performs unexpectedly, 11041RAL2 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 11041RAL2 will offset losses from the drop in 11041RAL2's long position.

The idea behind Pimco Preferred And and BALN 75 01 JUL 27 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.