Correlation Between PIMCO Monthly and NBI Liquid

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

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

Diversification Opportunities for PIMCO Monthly and NBI Liquid

0.24

Correlation Coefficient

PIMCO Monthly  NBI Liquid

Modest diversification

The 3 months correlation between PIMCO and NBI is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Monthly Income and NBI Liquid Alternatives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Liquid Alternatives and PIMCO Monthly 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 Monthly Income are associated (or correlated) with NBI Liquid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Liquid Alternatives has no effect on the direction of PIMCO Monthly i.e., PIMCO Monthly and NBI Liquid go up and down completely randomly.

Pair Corralation between PIMCO Monthly and NBI Liquid

Assuming the 90 days trading horizon PIMCO Monthly Income is expected to generate 0.43 times more return on investment than NBI Liquid. However, PIMCO Monthly Income is 2.32 times less risky than NBI Liquid. It trades about 0.04 of its potential returns per unit of risk. NBI Liquid Alternatives is currently generating about -0.12 per unit of risk. If you would invest  1,808  in PIMCO Monthly Income on September 12, 2024 and sell it today you would earn a total of  10.00  from holding PIMCO Monthly Income or generate 0.55% return on investment over 90 days.

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

PIMCO Monthly Income  vs.  NBI Liquid Alternatives

PIMCO Monthly Income

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Monthly Income are ranked lower than 3 (%) 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.

NBI Liquid Alternatives

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBI Liquid Alternatives has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, NBI Liquid is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PIMCO Monthly and NBI Liquid

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

The idea behind PIMCO Monthly Income and NBI Liquid Alternatives 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.