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 Bond, 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

0.94

Correlation Coefficient

Pimco Total  Core Plus

Almost no diversification

The 3 months correlation between Pimco and Core is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Total Return and Core Plus Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Plus Bond 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 Bond 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 generate 1.0 times more return on investment than Core Plus. However, Pimco Total Return is 1.0 times less risky than Core Plus. It trades about 0.05 of its potential returns per unit of risk. Core Plus Bond is currently generating about 0.03 per unit of risk. If you would invest  793.00  in Pimco Total Return on December 6, 2024 and sell it today you would earn a total of  74.00  from holding Pimco Total Return or generate 9.33% return on investment 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 Bond

Pimco Total Return

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Total Return are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. 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 Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Core Plus Bond are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 Bond 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.