Correlation Between Pimco Preferred and PEPSICO

Can any of the company-specific risk be diversified away by investing in both Pimco Preferred and PEPSICO 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 PEPSICO 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 PEPSICO INC 275, you can compare the effects of market volatilities on Pimco Preferred and PEPSICO 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 PEPSICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Preferred and PEPSICO.

Diversification Opportunities for Pimco Preferred and PEPSICO

-0.47

Correlation Coefficient

Pimco Preferred  PEPSICO

Very good diversification

The 3 months correlation between Pimco and PEPSICO is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Preferred And and PEPSICO INC 275 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEPSICO INC 275 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 PEPSICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEPSICO INC 275 has no effect on the direction of Pimco Preferred i.e., Pimco Preferred and PEPSICO go up and down completely randomly.

Pair Corralation between Pimco Preferred and PEPSICO

Assuming the 90 days horizon Pimco Preferred And is expected to generate 1.66 times more return on investment than PEPSICO. However, Pimco Preferred is 1.66 times more volatile than PEPSICO INC 275. It trades about 0.08 of its potential returns per unit of risk. PEPSICO INC 275 is currently generating about 0.01 per unit of risk. If you would invest  805.00  in Pimco Preferred And on September 24, 2024 and sell it today you would earn a total of  132.00  from holding Pimco Preferred And or generate 16.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.19%
Values	Daily Returns

Pimco Preferred And  vs.  PEPSICO INC 275

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.

PEPSICO INC 275

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEPSICO INC 275 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PEPSICO 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 Preferred and PEPSICO

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

The idea behind Pimco Preferred And and PEPSICO INC 275 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.