Correlation Between Purpose Multi and PIMCO Monthly

Can any of the company-specific risk be diversified away by investing in both Purpose Multi and PIMCO Monthly 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 Purpose Multi and PIMCO Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Purpose Multi Asset Income and PIMCO Monthly Income, you can compare the effects of market volatilities on Purpose Multi and PIMCO Monthly 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 Purpose Multi with a short position of PIMCO Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purpose Multi and PIMCO Monthly.

Diversification Opportunities for Purpose Multi and PIMCO Monthly

0.75

Correlation Coefficient

Purpose Multi  PIMCO Monthly

Poor diversification

The 3 months correlation between Purpose and PIMCO is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Multi Asset Income and PIMCO Monthly Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Monthly Income and Purpose Multi 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 Purpose Multi Asset Income are associated (or correlated) with PIMCO Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Monthly Income has no effect on the direction of Purpose Multi i.e., Purpose Multi and PIMCO Monthly go up and down completely randomly.

Pair Corralation between Purpose Multi and PIMCO Monthly

Assuming the 90 days trading horizon Purpose Multi Asset Income is expected to generate 2.04 times more return on investment than PIMCO Monthly. However, Purpose Multi is 2.04 times more volatile than PIMCO Monthly Income. It trades about 0.1 of its potential returns per unit of risk. PIMCO Monthly Income is currently generating about 0.19 per unit of risk. If you would invest  1,815  in Purpose Multi Asset Income on December 30, 2024 and sell it today you would earn a total of  48.00  from holding Purpose Multi Asset Income or generate 2.64% return on investment over 90 days.

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

Purpose Multi Asset Income  vs.  PIMCO Monthly Income

Purpose Multi Asset

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Multi Asset Income are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Purpose Multi is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

PIMCO Monthly Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Monthly Income are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, PIMCO Monthly is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Purpose Multi and PIMCO Monthly

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

The idea behind Purpose Multi Asset Income and PIMCO Monthly 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..