Correlation Between Pimco High and Pimco Strategic

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

Diversification Opportunities for Pimco High and Pimco Strategic

-0.61

Correlation Coefficient

Pimco High  Pimco Strategic

Excellent diversification

The 3 months correlation between Pimco and Pimco is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pimco High Income and Pimco Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Strategic Income 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 Pimco Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Strategic Income has no effect on the direction of Pimco High i.e., Pimco High and Pimco Strategic go up and down completely randomly.

Pair Corralation between Pimco High and Pimco Strategic

Considering the 90-day investment horizon Pimco High Income is expected to generate 0.11 times more return on investment than Pimco Strategic. However, Pimco High Income is 9.4 times less risky than Pimco Strategic. It trades about 0.14 of its potential returns per unit of risk. Pimco Strategic Income is currently generating about -0.05 per unit of risk. If you would invest  475.00  in Pimco High Income on December 27, 2024 and sell it today you would earn a total of  15.00  from holding Pimco High Income or generate 3.16% return on investment over 90 days.

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

Pimco High Income  vs.  Pimco Strategic Income

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 11 (%) 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.

Pimco Strategic Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pimco Strategic Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating performance, the Fund's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the fund private investors.

Pair Trading with Pimco High and Pimco Strategic

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

The idea behind Pimco High Income and Pimco Strategic 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.