Correlation Between Pimco Stocksplus and Virtus Convertible

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

By analyzing existing cross correlation between Pimco Stocksplus International and Virtus Convertible, you can compare the effects of market volatilities on Pimco Stocksplus and Virtus Convertible 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 Stocksplus with a short position of Virtus Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Stocksplus and Virtus Convertible.

Diversification Opportunities for Pimco Stocksplus and Virtus Convertible

-0.18

Correlation Coefficient

Pimco Stocksplus  Virtus Convertible

Good diversification

The 3 months correlation between Pimco and Virtus is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Stocksplus International and Virtus Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Convertible and Pimco Stocksplus 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 Stocksplus International are associated (or correlated) with Virtus Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Convertible has no effect on the direction of Pimco Stocksplus i.e., Pimco Stocksplus and Virtus Convertible go up and down completely randomly.

Pair Corralation between Pimco Stocksplus and Virtus Convertible

Assuming the 90 days horizon Pimco Stocksplus International is expected to generate 0.89 times more return on investment than Virtus Convertible. However, Pimco Stocksplus International is 1.12 times less risky than Virtus Convertible. It trades about 0.21 of its potential returns per unit of risk. Virtus Convertible is currently generating about -0.09 per unit of risk. If you would invest  809.00  in Pimco Stocksplus International on December 21, 2024 and sell it today you would earn a total of  73.00  from holding Pimco Stocksplus International or generate 9.02% return on investment over 90 days.

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

Pimco Stocksplus International  vs.  Virtus Convertible

Pimco Stocksplus Int

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Stocksplus International are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pimco Stocksplus may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Virtus Convertible

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Convertible has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Virtus Convertible 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 Stocksplus and Virtus Convertible

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

The idea behind Pimco Stocksplus International and Virtus Convertible 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.