Correlation Between Pimco Income and James Alpha

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

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

Diversification Opportunities for Pimco Income and James Alpha

-0.37

Correlation Coefficient

Pimco Income  James Alpha

Very good diversification

The 3 months correlation between Pimco and James is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund and James Alpha Structured in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Alpha Structured and Pimco Income 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 Income Fund are associated (or correlated) with James Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Alpha Structured has no effect on the direction of Pimco Income i.e., Pimco Income and James Alpha go up and down completely randomly.

Pair Corralation between Pimco Income and James Alpha

Assuming the 90 days horizon Pimco Income Fund is expected to under-perform the James Alpha. In addition to that, Pimco Income is 1.84 times more volatile than James Alpha Structured. It trades about -0.01 of its total potential returns per unit of risk. James Alpha Structured is currently generating about 0.17 per unit of volatility. If you would invest  1,004  in James Alpha Structured on September 12, 2024 and sell it today you would earn a total of  12.00  from holding James Alpha Structured or generate 1.2% return on investment over 90 days.

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

Pimco Income Fund  vs.  James Alpha Structured

Pimco Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Income Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

James Alpha Structured

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in James Alpha Structured are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, James Alpha 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 Income and James Alpha

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

The idea behind Pimco Income Fund and James Alpha Structured 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.