Correlation Between Pimco High and Midas Special

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

Diversification Opportunities for Pimco High and Midas Special

0.27

Correlation Coefficient

Pimco High  Midas Special

Modest diversification

The 3 months correlation between Pimco and Midas is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Pimco High Income and Midas Special Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midas Special 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 Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midas Special has no effect on the direction of Pimco High i.e., Pimco High and Midas Special go up and down completely randomly.

Pair Corralation between Pimco High and Midas Special

Considering the 90-day investment horizon Pimco High Income is expected to generate 0.36 times more return on investment than Midas Special. However, Pimco High Income is 2.76 times less risky than Midas Special. It trades about 0.02 of its potential returns per unit of risk. Midas Special Fund is currently generating about -0.01 per unit of risk. If you would invest  492.00  in Pimco High Income on December 5, 2024 and sell it today you would earn a total of  2.00  from holding Pimco High Income or generate 0.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Pimco High Income  vs.  Midas Special Fund

Pimco High Income

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco High Income are ranked lower than 1 (%) 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 Special

Risk-Adjusted Performance

Weak

Over the last 90 days Midas Special Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Midas Special 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 High and Midas Special

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

The idea behind Pimco High Income and Midas Special Fund 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.