Correlation Between City National and Pimco Mortgage

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

By analyzing existing cross correlation between City National Rochdale and Pimco Mortgage Opportunities, you can compare the effects of market volatilities on City National and Pimco Mortgage 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 City National with a short position of Pimco Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of City National and Pimco Mortgage.

Diversification Opportunities for City National and Pimco Mortgage

-0.66

Correlation Coefficient

City National  Pimco Mortgage

Excellent diversification

The 3 months correlation between City and Pimco is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding City National Rochdale and Pimco Mortgage Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Mortgage Oppor and City National 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 City National Rochdale are associated (or correlated) with Pimco Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Mortgage Oppor has no effect on the direction of City National i.e., City National and Pimco Mortgage go up and down completely randomly.

Pair Corralation between City National and Pimco Mortgage

Assuming the 90 days horizon City National is expected to generate 1.08 times less return on investment than Pimco Mortgage. But when comparing it to its historical volatility, City National Rochdale is 1.49 times less risky than Pimco Mortgage. It trades about 0.05 of its potential returns per unit of risk. Pimco Mortgage Opportunities is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  924.00  in Pimco Mortgage Opportunities on September 16, 2024 and sell it today you would earn a total of  1.00  from holding Pimco Mortgage Opportunities or generate 0.11% return on investment over 90 days.

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

City National Rochdale  vs.  Pimco Mortgage Opportunities

City National Rochdale

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in City National Rochdale are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, City National is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Mortgage Oppor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Mortgage Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Pimco Mortgage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with City National and Pimco Mortgage

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

The idea behind City National Rochdale and Pimco Mortgage Opportunities 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 Anywhere module to track or share privately all of your investments from the convenience of any device.