Correlation Between Pimco Rae and Mid Cap

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

By analyzing existing cross correlation between Pimco Rae Worldwide and Mid Cap 15x Strategy, you can compare the effects of market volatilities on Pimco Rae and Mid Cap 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 Rae with a short position of Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Rae and Mid Cap.

Diversification Opportunities for Pimco Rae and Mid Cap

-0.59

Correlation Coefficient

Pimco Rae  Mid Cap

Excellent diversification

The 3 months correlation between Pimco and Mid is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Worldwide and Mid Cap 15x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap 15x and Pimco Rae 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 Rae Worldwide are associated (or correlated) with Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap 15x has no effect on the direction of Pimco Rae i.e., Pimco Rae and Mid Cap go up and down completely randomly.

Pair Corralation between Pimco Rae and Mid Cap

Assuming the 90 days horizon Pimco Rae Worldwide is expected to generate 0.36 times more return on investment than Mid Cap. However, Pimco Rae Worldwide is 2.8 times less risky than Mid Cap. It trades about 0.2 of its potential returns per unit of risk. Mid Cap 15x Strategy is currently generating about -0.1 per unit of risk. If you would invest  736.00  in Pimco Rae Worldwide on December 19, 2024 and sell it today you would earn a total of  48.00  from holding Pimco Rae Worldwide or generate 6.52% return on investment over 90 days.

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

Pimco Rae Worldwide  vs.  Mid Cap 15x Strategy

Pimco Rae Worldwide

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Rae Worldwide are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Pimco Rae may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mid Cap 15x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid Cap 15x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Pimco Rae and Mid Cap

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

The idea behind Pimco Rae Worldwide and Mid Cap 15x Strategy 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 CEOs Directory module to screen CEOs from public companies around the world.