Correlation Between Pimco Trends and IMGP DBi

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

Diversification Opportunities for Pimco Trends and IMGP DBi

0.25

Correlation Coefficient

Pimco Trends  IMGP DBi

Modest diversification

The 3 months correlation between Pimco and IMGP is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Trends Managed and iMGP DBi Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iMGP DBi Managed 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 IMGP DBi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iMGP DBi Managed has no effect on the direction of Pimco Trends i.e., Pimco Trends and IMGP DBi go up and down completely randomly.

Pair Corralation between Pimco Trends and IMGP DBi

Assuming the 90 days horizon Pimco Trends Managed is expected to generate 1.42 times more return on investment than IMGP DBi. However, Pimco Trends is 1.42 times more volatile than iMGP DBi Managed. It trades about 0.01 of its potential returns per unit of risk. iMGP DBi Managed is currently generating about -0.15 per unit of risk. If you would invest  1,021  in Pimco Trends Managed on September 25, 2024 and sell it today you would earn a total of  1.00  from holding Pimco Trends Managed or generate 0.1% return on investment over 90 days.

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

Pimco Trends Managed  vs.  iMGP DBi Managed

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 fundamental indicators, Pimco Trends is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iMGP DBi Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iMGP DBi Managed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, IMGP DBi is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pimco Trends and IMGP DBi

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

The idea behind Pimco Trends Managed and iMGP DBi Managed 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.