Correlation Between Pimco Corporate and Pimco New

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

Diversification Opportunities for Pimco Corporate and Pimco New

-0.47

Correlation Coefficient

Pimco Corporate  Pimco New

Very good diversification

The 3 months correlation between Pimco and Pimco is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Corporate Income and Pimco New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco New York 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 Pimco New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco New York has no effect on the direction of Pimco Corporate i.e., Pimco Corporate and Pimco New go up and down completely randomly.

Pair Corralation between Pimco Corporate and Pimco New

Considering the 90-day investment horizon Pimco Corporate Income is expected to generate 0.98 times more return on investment than Pimco New. However, Pimco Corporate Income is 1.02 times less risky than Pimco New. It trades about 0.13 of its potential returns per unit of risk. Pimco New York is currently generating about 0.05 per unit of risk. If you would invest  1,230  in Pimco Corporate Income on September 4, 2024 and sell it today you would earn a total of  249.00  from holding Pimco Corporate Income or generate 20.24% return on investment over 90 days.

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

Pimco Corporate Income  vs.  Pimco New York

Pimco Corporate Income

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Corporate Income are ranked lower than 30 (%) 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.

Pimco New York

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco New York are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Pimco New is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Pimco Corporate and Pimco New

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

The idea behind Pimco Corporate Income and Pimco New York 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.