Correlation Between PIMCO Mortgage and Barclays Capital

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

By analyzing existing cross correlation between PIMCO Mortgage Backed Securities and Barclays Capital, you can compare the effects of market volatilities on PIMCO Mortgage and Barclays Capital 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 Mortgage with a short position of Barclays Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Mortgage and Barclays Capital.

Diversification Opportunities for PIMCO Mortgage and Barclays Capital

-0.48

Correlation Coefficient

PIMCO Mortgage  Barclays Capital

Very good diversification

The 3 months correlation between PIMCO and Barclays is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Mortgage Backed Securiti and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital and PIMCO Mortgage 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 Mortgage Backed Securities are associated (or correlated) with Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of PIMCO Mortgage i.e., PIMCO Mortgage and Barclays Capital go up and down completely randomly.

Pair Corralation between PIMCO Mortgage and Barclays Capital

If you would invest  4,813  in PIMCO Mortgage Backed Securities on September 18, 2024 and sell it today you would earn a total of  39.00  from holding PIMCO Mortgage Backed Securities or generate 0.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	9.52%
Values	Daily Returns

PIMCO Mortgage Backed Securiti  vs.  Barclays Capital

PIMCO Mortgage Backed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PIMCO Mortgage Backed Securities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, PIMCO Mortgage is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Barclays Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barclays Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Barclays Capital is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PIMCO Mortgage and Barclays Capital

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

The idea behind PIMCO Mortgage Backed Securities and Barclays Capital 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.