Correlation Between Pimco Corporate and Avantis International

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

By analyzing existing cross correlation between Pimco Corporate Income and Avantis International Small, you can compare the effects of market volatilities on Pimco Corporate and Avantis 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 Corporate with a short position of Avantis International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Corporate and Avantis International.

Diversification Opportunities for Pimco Corporate and Avantis International

0.63

Correlation Coefficient

Pimco Corporate  Avantis International

Poor diversification

The 3 months correlation between Pimco and Avantis is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Corporate Income and Avantis International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis International and Pimco Corporate 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 Corporate Income are associated (or correlated) with Avantis International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis International has no effect on the direction of Pimco Corporate i.e., Pimco Corporate and Avantis International go up and down completely randomly.

Pair Corralation between Pimco Corporate and Avantis International

Considering the 90-day investment horizon Pimco Corporate is expected to generate 2.64 times less return on investment than Avantis International. But when comparing it to its historical volatility, Pimco Corporate Income is 3.31 times less risky than Avantis International. It trades about 0.22 of its potential returns per unit of risk. Avantis International Small is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,222  in Avantis International Small on December 28, 2024 and sell it today you would earn a total of  112.00  from holding Avantis International Small or generate 9.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Pimco Corporate Income  vs.  Avantis International Small

Pimco Corporate Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Corporate Income are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Corporate is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Avantis International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis International Small are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Avantis International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Pimco Corporate and Avantis International

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

The idea behind Pimco Corporate Income and Avantis International Small 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.