Correlation Between Stocksplus Total and Pimco International

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

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

Diversification Opportunities for Stocksplus Total and Pimco International

-0.11

Correlation Coefficient

Stocksplus Total  Pimco International

Good diversification

The 3 months correlation between Stocksplus and Pimco is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Stocksplus Total Return and Pimco International Stocksplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco International and Stocksplus Total 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 Stocksplus Total Return are associated (or correlated) with Pimco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco International has no effect on the direction of Stocksplus Total i.e., Stocksplus Total and Pimco International go up and down completely randomly.

Pair Corralation between Stocksplus Total and Pimco International

Assuming the 90 days horizon Stocksplus Total Return is expected to generate 1.82 times more return on investment than Pimco International. However, Stocksplus Total is 1.82 times more volatile than Pimco International Stocksplus. It trades about -0.02 of its potential returns per unit of risk. Pimco International Stocksplus is currently generating about -0.03 per unit of risk. If you would invest  1,314  in Stocksplus Total Return on September 27, 2024 and sell it today you would lose (14.00) from holding Stocksplus Total Return or give up 1.07% of portfolio value over 90 days.

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

Stocksplus Total Return  vs.  Pimco International Stocksplus

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.

Pimco International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Stocksplus Total and Pimco International

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

The idea behind Stocksplus Total Return and Pimco International Stocksplus 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.