Correlation Between Pimco Total and Core Plus

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

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

Diversification Opportunities for Pimco Total and Core Plus

0.99

Correlation Coefficient

Pimco Total  Core Plus

No risk reduction

The 3 months correlation between Pimco and Core is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Total Return and Core Plus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Plus Fund and Pimco 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 Pimco Total Return are associated (or correlated) with Core Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Plus Fund has no effect on the direction of Pimco Total i.e., Pimco Total and Core Plus go up and down completely randomly.

Pair Corralation between Pimco Total and Core Plus

Assuming the 90 days horizon Pimco Total Return is expected to under-perform the Core Plus. In addition to that, Pimco Total is 1.01 times more volatile than Core Plus Fund. It trades about -0.13 of its total potential returns per unit of risk. Core Plus Fund is currently generating about -0.13 per unit of volatility. If you would invest  930.00  in Core Plus Fund on October 5, 2024 and sell it today you would lose (22.00) from holding Core Plus Fund or give up 2.37% of portfolio value over 90 days.

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

Pimco Total Return  vs.  Core Plus Fund

Pimco Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

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

Core Plus Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Plus Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Core Plus 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 Total and Core Plus

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

The idea behind Pimco Total Return and Core Plus Fund 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.