Correlation Between Pimco Stocksplus and Gnma Fund

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

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

Diversification Opportunities for Pimco Stocksplus and Gnma Fund

-0.63

Correlation Coefficient

Pimco Stocksplus  Gnma Fund

Excellent diversification

The 3 months correlation between Pimco and Gnma is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Stocksplus Small and Gnma Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gnma Fund A 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 Small are associated (or correlated) with Gnma Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gnma Fund A has no effect on the direction of Pimco Stocksplus i.e., Pimco Stocksplus and Gnma Fund go up and down completely randomly.

Pair Corralation between Pimco Stocksplus and Gnma Fund

Assuming the 90 days horizon Pimco Stocksplus Small is expected to under-perform the Gnma Fund. In addition to that, Pimco Stocksplus is 3.66 times more volatile than Gnma Fund A. It trades about -0.1 of its total potential returns per unit of risk. Gnma Fund A is currently generating about 0.14 per unit of volatility. If you would invest  910.00  in Gnma Fund A on December 20, 2024 and sell it today you would earn a total of  27.00  from holding Gnma Fund A or generate 2.97% return on investment over 90 days.

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

Pimco Stocksplus Small  vs.  Gnma Fund A

Pimco Stocksplus Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pimco Stocksplus Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Gnma Fund A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gnma Fund A are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gnma Fund 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 Gnma Fund

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

The idea behind Pimco Stocksplus Small and Gnma Fund A 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.