Correlation Between Pimco Dynamic and Pimco Rae

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

By analyzing existing cross correlation between Pimco Dynamic Bond and Pimco Rae Fundamental, you can compare the effects of market volatilities on Pimco Dynamic and Pimco Rae 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 Dynamic with a short position of Pimco Rae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Dynamic and Pimco Rae.

Diversification Opportunities for Pimco Dynamic and Pimco Rae

-0.39

Correlation Coefficient

Pimco Dynamic  Pimco Rae

Very good diversification

The 3 months correlation between Pimco and Pimco is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Dynamic Bond and Pimco Rae Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Rae Fundamental and Pimco Dynamic 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 Dynamic Bond are associated (or correlated) with Pimco Rae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Rae Fundamental has no effect on the direction of Pimco Dynamic i.e., Pimco Dynamic and Pimco Rae go up and down completely randomly.

Pair Corralation between Pimco Dynamic and Pimco Rae

Assuming the 90 days horizon Pimco Dynamic is expected to generate 1.35 times less return on investment than Pimco Rae. But when comparing it to its historical volatility, Pimco Dynamic Bond is 6.01 times less risky than Pimco Rae. It trades about 0.17 of its potential returns per unit of risk. Pimco Rae Fundamental is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  972.00  in Pimco Rae Fundamental on September 25, 2024 and sell it today you would earn a total of  73.00  from holding Pimco Rae Fundamental or generate 7.51% return on investment over 90 days.

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

Pimco Dynamic Bond  vs.  Pimco Rae Fundamental

Pimco Dynamic Bond

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Bond are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Rae Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Rae Fundamental has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Pimco Dynamic and Pimco Rae

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

The idea behind Pimco Dynamic Bond and Pimco Rae Fundamental 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.