Correlation Between PIMCO Mortgage and 6 Meridian

Can any of the company-specific risk be diversified away by investing in both PIMCO Mortgage and 6 Meridian 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 6 Meridian 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 6 Meridian Mega, you can compare the effects of market volatilities on PIMCO Mortgage and 6 Meridian 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 6 Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Mortgage and 6 Meridian.

Diversification Opportunities for PIMCO Mortgage and 6 Meridian

-0.18

Correlation Coefficient

PIMCO Mortgage  6 Meridian

Good diversification

The 3 months correlation between PIMCO and SIXA is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Mortgage Backed Securiti and 6 Meridian Mega in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 6 Meridian Mega 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 6 Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 6 Meridian Mega has no effect on the direction of PIMCO Mortgage i.e., PIMCO Mortgage and 6 Meridian go up and down completely randomly.

Pair Corralation between PIMCO Mortgage and 6 Meridian

Given the investment horizon of 90 days PIMCO Mortgage Backed Securities is expected to under-perform the 6 Meridian. But the etf apears to be less risky and, when comparing its historical volatility, PIMCO Mortgage Backed Securities is 1.56 times less risky than 6 Meridian. The etf trades about -0.09 of its potential returns per unit of risk. The 6 Meridian Mega is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,414  in 6 Meridian Mega on September 13, 2024 and sell it today you would earn a total of  153.00  from holding 6 Meridian Mega or generate 3.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

PIMCO Mortgage Backed Securiti  vs.  6 Meridian Mega

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.

6 Meridian Mega

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 6 Meridian Mega are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 6 Meridian is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PIMCO Mortgage and 6 Meridian

The main advantage of trading using opposite PIMCO Mortgage and 6 Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Mortgage position performs unexpectedly, 6 Meridian 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 6 Meridian will offset losses from the drop in 6 Meridian's long position.

The idea behind PIMCO Mortgage Backed Securities and 6 Meridian Mega 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.