Correlation Between Pimco Corporate and Fpa New

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

Diversification Opportunities for Pimco Corporate and Fpa New

0.56

Correlation Coefficient

Pimco Corporate  Fpa New

Very weak diversification

The 3 months correlation between Pimco and Fpa is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Corporate Income and Fpa New Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fpa New Income 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 Fpa New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fpa New Income has no effect on the direction of Pimco Corporate i.e., Pimco Corporate and Fpa New go up and down completely randomly.

Pair Corralation between Pimco Corporate and Fpa New

Considering the 90-day investment horizon Pimco Corporate Income is expected to generate 1.44 times more return on investment than Fpa New. However, Pimco Corporate is 1.44 times more volatile than Fpa New Income. It trades about 0.21 of its potential returns per unit of risk. Fpa New Income is currently generating about 0.21 per unit of risk. If you would invest  1,395  in Pimco Corporate Income on December 27, 2024 and sell it today you would earn a total of  48.00  from holding Pimco Corporate Income or generate 3.44% return on investment over 90 days.

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

Pimco Corporate Income  vs.  Fpa New Income

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 16 (%) 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.

Fpa New Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fpa New Income are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fpa New 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 Corporate and Fpa New

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

The idea behind Pimco Corporate Income and Fpa New Income 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.