Correlation Between Pimco High and Cornerstone Aggressive

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

Diversification Opportunities for Pimco High and Cornerstone Aggressive

0.68

Correlation Coefficient

Pimco High  Cornerstone Aggressive

Poor diversification

The 3 months correlation between Pimco and Cornerstone is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pimco High Income and Cornerstone Aggressive Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Aggressive 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 Cornerstone Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Aggressive has no effect on the direction of Pimco High i.e., Pimco High and Cornerstone Aggressive go up and down completely randomly.

Pair Corralation between Pimco High and Cornerstone Aggressive

Considering the 90-day investment horizon Pimco High Income is expected to generate 0.41 times more return on investment than Cornerstone Aggressive. However, Pimco High Income is 2.46 times less risky than Cornerstone Aggressive. It trades about 0.02 of its potential returns per unit of risk. Cornerstone Aggressive Fund is currently generating about -0.13 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	Significant
Accuracy	100.0%
Values	Daily Returns

Pimco High Income  vs.  Cornerstone Aggressive 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.

Cornerstone Aggressive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cornerstone Aggressive Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Pimco High and Cornerstone Aggressive

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

The idea behind Pimco High Income and Cornerstone Aggressive 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.

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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.