Correlation Between Pimco Stocksplus and Stocksplus Total

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

By analyzing existing cross correlation between Pimco Stocksplus Long and Stocksplus Total Return, you can compare the effects of market volatilities on Pimco Stocksplus and Stocksplus Total 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 Stocksplus with a short position of Stocksplus Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Stocksplus and Stocksplus Total.

Diversification Opportunities for Pimco Stocksplus and Stocksplus Total

0.38

Correlation Coefficient

Pimco Stocksplus  Stocksplus Total

Weak diversification

The 3 months correlation between Pimco and Stocksplus is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Stocksplus Long and Stocksplus Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stocksplus Total Return and Pimco Stocksplus 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 Stocksplus Long are associated (or correlated) with Stocksplus Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stocksplus Total Return has no effect on the direction of Pimco Stocksplus i.e., Pimco Stocksplus and Stocksplus Total go up and down completely randomly.

Pair Corralation between Pimco Stocksplus and Stocksplus Total

Assuming the 90 days horizon Pimco Stocksplus Long is expected to generate 0.93 times more return on investment than Stocksplus Total. However, Pimco Stocksplus Long is 1.07 times less risky than Stocksplus Total. It trades about -0.12 of its potential returns per unit of risk. Stocksplus Total Return is currently generating about -0.17 per unit of risk. If you would invest  1,793  in Pimco Stocksplus Long on September 27, 2024 and sell it today you would lose (61.00) from holding Pimco Stocksplus Long or give up 3.4% of portfolio value over 90 days.

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

Pimco Stocksplus Long  vs.  Stocksplus Total Return

Pimco Stocksplus Long

Risk-Adjusted Performance

0 of 100

Very Weak

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

Stocksplus Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stocksplus Total Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Stocksplus Total 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 Stocksplus and Stocksplus Total

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

The idea behind Pimco Stocksplus Long and Stocksplus Total Return 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.