Correlation Between Pimco Trends and Otter Creek

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

By analyzing existing cross correlation between Pimco Trends Managed and Otter Creek Longshort, you can compare the effects of market volatilities on Pimco Trends and Otter Creek 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 Trends with a short position of Otter Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Trends and Otter Creek.

Diversification Opportunities for Pimco Trends and Otter Creek

-0.62

Correlation Coefficient

Pimco Trends  Otter Creek

Excellent diversification

The 3 months correlation between Pimco and Otter is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Trends Managed and Otter Creek Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otter Creek Longshort and Pimco Trends 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 Trends Managed are associated (or correlated) with Otter Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otter Creek Longshort has no effect on the direction of Pimco Trends i.e., Pimco Trends and Otter Creek go up and down completely randomly.

Pair Corralation between Pimco Trends and Otter Creek

Assuming the 90 days horizon Pimco Trends Managed is expected to generate 0.86 times more return on investment than Otter Creek. However, Pimco Trends Managed is 1.16 times less risky than Otter Creek. It trades about 0.21 of its potential returns per unit of risk. Otter Creek Longshort is currently generating about 0.06 per unit of risk. If you would invest  974.00  in Pimco Trends Managed on September 5, 2024 and sell it today you would earn a total of  29.00  from holding Pimco Trends Managed or generate 2.98% return on investment over 90 days.

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

Pimco Trends Managed  vs.  Otter Creek Longshort

Pimco Trends Managed

Risk-Adjusted Performance

0 of 100

Very Weak

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

Otter Creek Longshort

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Otter Creek Longshort are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Otter Creek 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 Trends and Otter Creek

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

The idea behind Pimco Trends Managed and Otter Creek Longshort 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.