Correlation Between Short Term and Pimco Rae

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

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

Diversification Opportunities for Short Term and Pimco Rae

-0.83

Correlation Coefficient

Short Term  Pimco Rae

Pay attention - limited upside

The 3 months correlation between Short and Pimco is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Fund C 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 Short Term 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 Short Term Fund C 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 Short Term i.e., Short Term and Pimco Rae go up and down completely randomly.

Pair Corralation between Short Term and Pimco Rae

Assuming the 90 days horizon Short Term Fund C is expected to generate 0.11 times more return on investment than Pimco Rae. However, Short Term Fund C is 9.43 times less risky than Pimco Rae. It trades about 0.24 of its potential returns per unit of risk. Pimco Rae Fundamental is currently generating about 0.01 per unit of risk. If you would invest  873.00  in Short Term Fund C on October 10, 2024 and sell it today you would earn a total of  95.00  from holding Short Term Fund C or generate 10.88% return on investment over 90 days.

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

Short Term Fund C  vs.  Pimco Rae Fundamental

Short Term Fund

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Fund C are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Short Term 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 weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Short Term and Pimco Rae

The main advantage of trading using opposite Short Term and Pimco Rae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Term 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 Short Term Fund C 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.