Correlation Between Pimco Short-term and Cambiar International

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

By analyzing existing cross correlation between Pimco Short Term Fund and Cambiar International Equity, you can compare the effects of market volatilities on Pimco Short-term and Cambiar 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 Pimco Short-term with a short position of Cambiar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Short-term and Cambiar International.

Diversification Opportunities for Pimco Short-term and Cambiar International

0.68

Correlation Coefficient

Pimco Short-term  Cambiar International

Poor diversification

The 3 months correlation between Pimco and Cambiar is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Short Term Fund and Cambiar International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar International and Pimco Short-term 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 Short Term Fund are associated (or correlated) with Cambiar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar International has no effect on the direction of Pimco Short-term i.e., Pimco Short-term and Cambiar International go up and down completely randomly.

Pair Corralation between Pimco Short-term and Cambiar International

Assuming the 90 days horizon Pimco Short-term is expected to generate 2.32 times less return on investment than Cambiar International. But when comparing it to its historical volatility, Pimco Short Term Fund is 7.48 times less risky than Cambiar International. It trades about 0.23 of its potential returns per unit of risk. Cambiar International Equity is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,169  in Cambiar International Equity on December 1, 2024 and sell it today you would earn a total of  612.00  from holding Cambiar International Equity or generate 28.22% return on investment over 90 days.

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

Pimco Short Term Fund  vs.  Cambiar International Equity

Pimco Short Term

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Short Term Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cambiar International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cambiar International Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Cambiar 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 Pimco Short-term and Cambiar International

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

The idea behind Pimco Short Term Fund and Cambiar International Equity 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.