Correlation Between Pimco Stocksplus and Sparta Capital

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

By analyzing existing cross correlation between Pimco Stocksplus Short and Sparta Capital, you can compare the effects of market volatilities on Pimco Stocksplus and Sparta Capital 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 Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Stocksplus and Sparta Capital.

Diversification Opportunities for Pimco Stocksplus and Sparta Capital

0.2

Correlation Coefficient

Pimco Stocksplus  Sparta Capital

Modest diversification

The 3 months correlation between Pimco and Sparta is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Stocksplus Short and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital 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 Short are associated (or correlated) with Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of Pimco Stocksplus i.e., Pimco Stocksplus and Sparta Capital go up and down completely randomly.

Pair Corralation between Pimco Stocksplus and Sparta Capital

Assuming the 90 days horizon Pimco Stocksplus Short is expected to generate 0.14 times more return on investment than Sparta Capital. However, Pimco Stocksplus Short is 6.98 times less risky than Sparta Capital. It trades about 0.17 of its potential returns per unit of risk. Sparta Capital is currently generating about -0.23 per unit of risk. If you would invest  687.00  in Pimco Stocksplus Short on October 9, 2024 and sell it today you would earn a total of  23.00  from holding Pimco Stocksplus Short or generate 3.35% return on investment over 90 days.

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

Pimco Stocksplus Short  vs.  Sparta Capital

Pimco Stocksplus Short

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Stocksplus Short are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Stocksplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sparta Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparta Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pimco Stocksplus and Sparta Capital

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

The idea behind Pimco Stocksplus Short and Sparta Capital 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.