Correlation Between PIMCO Global and Blue Ribbon

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

By analyzing existing cross correlation between PIMCO Global Incme and Blue Ribbon Income, you can compare the effects of market volatilities on PIMCO Global and Blue Ribbon 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 Global with a short position of Blue Ribbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Global and Blue Ribbon.

Diversification Opportunities for PIMCO Global and Blue Ribbon

-0.57

Correlation Coefficient

PIMCO Global  Blue Ribbon

Excellent diversification

The 3 months correlation between PIMCO and Blue is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Global Incme and Blue Ribbon Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Ribbon Income and PIMCO Global 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 Global Incme are associated (or correlated) with Blue Ribbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Ribbon Income has no effect on the direction of PIMCO Global i.e., PIMCO Global and Blue Ribbon go up and down completely randomly.

Pair Corralation between PIMCO Global and Blue Ribbon

Assuming the 90 days trading horizon PIMCO Global Incme is expected to generate 0.42 times more return on investment than Blue Ribbon. However, PIMCO Global Incme is 2.37 times less risky than Blue Ribbon. It trades about 0.09 of its potential returns per unit of risk. Blue Ribbon Income is currently generating about -0.12 per unit of risk. If you would invest  721.00  in PIMCO Global Incme on December 30, 2024 and sell it today you would earn a total of  23.00  from holding PIMCO Global Incme or generate 3.19% return on investment over 90 days.

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

PIMCO Global Incme  vs.  Blue Ribbon Income

PIMCO Global Incme

Risk-Adjusted Performance

OK

Over the last 90 days PIMCO Global Incme has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong forward indicators, PIMCO Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blue Ribbon Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blue Ribbon Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PIMCO Global and Blue Ribbon

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

The idea behind PIMCO Global Incme and Blue Ribbon Income 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.