Correlation Between Pimco Trends and Credit Suisse

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

Diversification Opportunities for Pimco Trends and Credit Suisse

0.08

Correlation Coefficient

Pimco Trends  Credit Suisse

Significant diversification

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

Pair Corralation between Pimco Trends and Credit Suisse

Assuming the 90 days horizon Pimco Trends Managed is expected to under-perform the Credit Suisse. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Trends Managed is 1.4 times less risky than Credit Suisse. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Credit Suisse Managed is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  848.00  in Credit Suisse Managed on December 29, 2024 and sell it today you would earn a total of  11.00  from holding Credit Suisse Managed or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Pimco Trends Managed  vs.  Credit Suisse Managed

Pimco Trends Managed

Risk-Adjusted Performance

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.

Credit Suisse Managed

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Suisse Managed are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Credit Suisse 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 Credit Suisse

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

The idea behind Pimco Trends Managed and Credit Suisse 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.