Correlation Between PIMCO Tactical and CI Gold

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

By analyzing existing cross correlation between PIMCO Tactical Income and CI Gold Bullion, you can compare the effects of market volatilities on PIMCO Tactical and CI Gold 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 Tactical with a short position of CI Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Tactical and CI Gold.

Diversification Opportunities for PIMCO Tactical and CI Gold

-0.45

Correlation Coefficient

PIMCO Tactical  CI Gold

Very good diversification

The 3 months correlation between PIMCO and VALT-B is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Tactical Income and CI Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Gold Bullion and PIMCO Tactical 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 Tactical Income are associated (or correlated) with CI Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Gold Bullion has no effect on the direction of PIMCO Tactical i.e., PIMCO Tactical and CI Gold go up and down completely randomly.

Pair Corralation between PIMCO Tactical and CI Gold

Assuming the 90 days trading horizon PIMCO Tactical is expected to generate 2.27 times less return on investment than CI Gold. But when comparing it to its historical volatility, PIMCO Tactical Income is 1.1 times less risky than CI Gold. It trades about 0.08 of its potential returns per unit of risk. CI Gold Bullion is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,693  in CI Gold Bullion on October 6, 2024 and sell it today you would earn a total of  1,090  from holding CI Gold Bullion or generate 40.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

PIMCO Tactical Income  vs.  CI Gold Bullion

PIMCO Tactical Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PIMCO Tactical Income has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong forward indicators, PIMCO Tactical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

CI Gold Bullion

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Gold Bullion are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong essential indicators, CI Gold 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 Tactical and CI Gold

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

The idea behind PIMCO Tactical Income and CI Gold Bullion 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.