Correlation Between Pimco Rae and Pimco Senior

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

Diversification Opportunities for Pimco Rae and Pimco Senior

0.38

Correlation Coefficient

Pimco Rae  Pimco Senior

Weak diversification

The 3 months correlation between Pimco and Pimco is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Worldwide and Pimco Senior Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Senior Floating 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 Pimco Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Senior Floating has no effect on the direction of Pimco Rae i.e., Pimco Rae and Pimco Senior go up and down completely randomly.

Pair Corralation between Pimco Rae and Pimco Senior

Assuming the 90 days horizon Pimco Rae is expected to generate 4.44 times less return on investment than Pimco Senior. In addition to that, Pimco Rae is 2.98 times more volatile than Pimco Senior Floating. It trades about 0.02 of its total potential returns per unit of risk. Pimco Senior Floating is currently generating about 0.25 per unit of volatility. If you would invest  901.00  in Pimco Senior Floating on September 14, 2024 and sell it today you would earn a total of  16.00  from holding Pimco Senior Floating or generate 1.78% return on investment over 90 days.

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

Pimco Rae Worldwide  vs.  Pimco Senior Floating

Pimco Rae Worldwide

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Rae Worldwide are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Pimco Rae is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Senior Floating

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Senior Floating are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Senior 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 Rae and Pimco Senior

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

The idea behind Pimco Rae Worldwide and Pimco Senior Floating 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.