Correlation Between Pimco Municipal and Platinum Asia

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

By analyzing existing cross correlation between Pimco Municipal Income and Platinum Asia Investments, you can compare the effects of market volatilities on Pimco Municipal and Platinum Asia 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 Municipal with a short position of Platinum Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Municipal and Platinum Asia.

Diversification Opportunities for Pimco Municipal and Platinum Asia

0.54

Correlation Coefficient

Pimco Municipal  Platinum Asia

Very weak diversification

The 3 months correlation between Pimco and Platinum is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Municipal Income and Platinum Asia Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asia Investments and Pimco Municipal 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 Municipal Income are associated (or correlated) with Platinum Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asia Investments has no effect on the direction of Pimco Municipal i.e., Pimco Municipal and Platinum Asia go up and down completely randomly.

Pair Corralation between Pimco Municipal and Platinum Asia

Considering the 90-day investment horizon Pimco Municipal Income is expected to generate 0.88 times more return on investment than Platinum Asia. However, Pimco Municipal Income is 1.14 times less risky than Platinum Asia. It trades about 0.09 of its potential returns per unit of risk. Platinum Asia Investments is currently generating about 0.02 per unit of risk. If you would invest  720.00  in Pimco Municipal Income on October 22, 2024 and sell it today you would earn a total of  8.00  from holding Pimco Municipal Income or generate 1.11% return on investment over 90 days.

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

Pimco Municipal Income  vs.  Platinum Asia Investments

Pimco Municipal Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Municipal Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest fragile performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Platinum Asia Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Asia Investments has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong basic indicators, Platinum Asia is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Pimco Municipal and Platinum Asia

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

The idea behind Pimco Municipal Income and Platinum Asia Investments 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.

Check out your portfolio center.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.