Correlation Between Pimco New and Nuveen Mortgage

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

By analyzing existing cross correlation between Pimco New York and Nuveen Mortgage Opportunity, you can compare the effects of market volatilities on Pimco New and Nuveen Mortgage 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 New with a short position of Nuveen Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco New and Nuveen Mortgage.

Diversification Opportunities for Pimco New and Nuveen Mortgage

-0.08

Correlation Coefficient

Pimco New  Nuveen Mortgage

Good diversification

The 3 months correlation between Pimco and Nuveen is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York and Nuveen Mortgage Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Mortgage Oppo and Pimco New 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 New York are associated (or correlated) with Nuveen Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Mortgage Oppo has no effect on the direction of Pimco New i.e., Pimco New and Nuveen Mortgage go up and down completely randomly.

Pair Corralation between Pimco New and Nuveen Mortgage

Considering the 90-day investment horizon Pimco New York is expected to under-perform the Nuveen Mortgage. In addition to that, Pimco New is 1.12 times more volatile than Nuveen Mortgage Opportunity. It trades about -0.04 of its total potential returns per unit of risk. Nuveen Mortgage Opportunity is currently generating about 0.09 per unit of volatility. If you would invest  1,359  in Nuveen Mortgage Opportunity on October 7, 2024 and sell it today you would earn a total of  464.00  from holding Nuveen Mortgage Opportunity or generate 34.14% return on investment over 90 days.

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

Pimco New York  vs.  Nuveen Mortgage Opportunity

Pimco New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco New York has generated negative risk-adjusted returns adding no value to fund investors. Despite latest abnormal performance, the Fund's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the mutual fund stockholders.

Nuveen Mortgage Oppo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pimco New and Nuveen Mortgage

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

The idea behind Pimco New York and Nuveen Mortgage Opportunity 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 Transaction History module to view history of all your transactions and understand their impact on performance.