Correlation Between Pimco New and New York

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

Diversification Opportunities for Pimco New and New York

1.0

Correlation Coefficient

Pimco New  New York

No risk reduction

The 3 months correlation between Pimco and New is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York and New York Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Municipal 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 New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Municipal has no effect on the direction of Pimco New i.e., Pimco New and New York go up and down completely randomly.

Pair Corralation between Pimco New and New York

Assuming the 90 days horizon Pimco New York is expected to generate 1.03 times more return on investment than New York. However, Pimco New is 1.03 times more volatile than New York Municipal. It trades about 0.04 of its potential returns per unit of risk. New York Municipal is currently generating about 0.01 per unit of risk. If you would invest  1,062  in Pimco New York on December 20, 2024 and sell it today you would earn a total of  5.00  from holding Pimco New York or generate 0.47% return on investment over 90 days.

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

Pimco New York  vs.  New York Municipal

Pimco New York

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco New York are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

New York Municipal

Risk-Adjusted Performance

Very Weak

Over the last 90 days New York Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, New York is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pimco New and New York

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

The idea behind Pimco New York and New York Municipal 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.