Correlation Between Ab Small and Pimco Trends

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

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

Diversification Opportunities for Ab Small and Pimco Trends

0.29

Correlation Coefficient

Ab Small  Pimco Trends

Modest diversification

The 3 months correlation between QUAIX and Pimco is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Pimco Trends Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Trends Managed and Ab Small 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 Ab Small Cap are associated (or correlated) with Pimco Trends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Trends Managed has no effect on the direction of Ab Small i.e., Ab Small and Pimco Trends go up and down completely randomly.

Pair Corralation between Ab Small and Pimco Trends

Assuming the 90 days horizon Ab Small Cap is expected to under-perform the Pimco Trends. In addition to that, Ab Small is 3.34 times more volatile than Pimco Trends Managed. It trades about -0.15 of its total potential returns per unit of risk. Pimco Trends Managed is currently generating about 0.26 per unit of volatility. If you would invest  1,009  in Pimco Trends Managed on October 8, 2024 and sell it today you would earn a total of  21.00  from holding Pimco Trends Managed or generate 2.08% return on investment over 90 days.

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

Ab Small Cap  vs.  Pimco Trends Managed

Ab Small Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Small Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ab Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Trends Managed

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Trends Managed are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pimco Trends is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab Small and Pimco Trends

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

The idea behind Ab Small Cap and Pimco Trends Managed 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.