Correlation Between Pimco High and Midas Fund

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

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

Diversification Opportunities for Pimco High and Midas Fund

0.84

Correlation Coefficient

Pimco High  Midas Fund

Very poor diversification

The 3 months correlation between Pimco and Midas is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pimco High Income and Midas Fund Midas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midas Fund Midas and Pimco High 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 High Income are associated (or correlated) with Midas Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midas Fund Midas has no effect on the direction of Pimco High i.e., Pimco High and Midas Fund go up and down completely randomly.

Pair Corralation between Pimco High and Midas Fund

Considering the 90-day investment horizon Pimco High is expected to generate 13.4 times less return on investment than Midas Fund. But when comparing it to its historical volatility, Pimco High Income is 4.19 times less risky than Midas Fund. It trades about 0.1 of its potential returns per unit of risk. Midas Fund Midas is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  119.00  in Midas Fund Midas on December 25, 2024 and sell it today you would earn a total of  42.00  from holding Midas Fund Midas or generate 35.29% return on investment over 90 days.

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

Pimco High Income  vs.  Midas Fund Midas

Pimco High Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco High Income are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent technical indicators, Pimco High is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Midas Fund Midas

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Midas Fund Midas are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Midas Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pimco High and Midas Fund

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

The idea behind Pimco High Income and Midas Fund Midas 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.