Correlation Between Pimco Total and Performance Trust

Can any of the company-specific risk be diversified away by investing in both Pimco Total and Performance Trust 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 Performance Trust 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 Performance Trust Strategic, you can compare the effects of market volatilities on Pimco Total and Performance Trust 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 Performance Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Total and Performance Trust.

Diversification Opportunities for Pimco Total and Performance Trust

0.99

Correlation Coefficient

Pimco Total  Performance Trust

No risk reduction

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

Pair Corralation between Pimco Total and Performance Trust

Assuming the 90 days horizon Pimco Total Return is expected to under-perform the Performance Trust. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Total Return is 1.05 times less risky than Performance Trust. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Performance Trust Strategic is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,002  in Performance Trust Strategic on September 3, 2024 and sell it today you would lose (1.00) from holding Performance Trust Strategic or give up 0.05% 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.  Performance Trust Strategic

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.

Performance Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Performance Trust Strategic has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Performance Trust 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 Performance Trust

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

The idea behind Pimco Total Return and Performance Trust Strategic 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.