Correlation Between PIMCO Mortgage and JPMorgan Nasdaq

Can any of the company-specific risk be diversified away by investing in both PIMCO Mortgage and JPMorgan Nasdaq 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 JPMorgan Nasdaq 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 JPMorgan Nasdaq Equity, you can compare the effects of market volatilities on PIMCO Mortgage and JPMorgan Nasdaq 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 JPMorgan Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Mortgage and JPMorgan Nasdaq.

Diversification Opportunities for PIMCO Mortgage and JPMorgan Nasdaq

-0.31

Correlation Coefficient

PIMCO Mortgage  JPMorgan Nasdaq

Very good diversification

The 3 months correlation between PIMCO and JPMorgan is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Mortgage Backed Securiti and JPMorgan Nasdaq Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Nasdaq Equity 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 JPMorgan Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Nasdaq Equity has no effect on the direction of PIMCO Mortgage i.e., PIMCO Mortgage and JPMorgan Nasdaq go up and down completely randomly.

Pair Corralation between PIMCO Mortgage and JPMorgan Nasdaq

Given the investment horizon of 90 days PIMCO Mortgage Backed Securities is expected to under-perform the JPMorgan Nasdaq. But the etf apears to be less risky and, when comparing its historical volatility, PIMCO Mortgage Backed Securities is 2.26 times less risky than JPMorgan Nasdaq. The etf trades about -0.12 of its potential returns per unit of risk. The JPMorgan Nasdaq Equity is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,550  in JPMorgan Nasdaq Equity on October 5, 2024 and sell it today you would earn a total of  2,158  from holding JPMorgan Nasdaq Equity or generate 60.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	15.82%
Values	Daily Returns

PIMCO Mortgage Backed Securiti  vs.  JPMorgan Nasdaq Equity

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

JPMorgan Nasdaq Equity

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Nasdaq Equity are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, JPMorgan Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PIMCO Mortgage and JPMorgan Nasdaq

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

The idea behind PIMCO Mortgage Backed Securities and JPMorgan Nasdaq Equity 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.