Correlation Between Nasdaq 100 and Pimco All

Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Pimco All 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 Nasdaq 100 and Pimco All into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Pimco All Asset, you can compare the effects of market volatilities on Nasdaq 100 and Pimco All 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 Nasdaq 100 with a short position of Pimco All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Pimco All.

Diversification Opportunities for Nasdaq 100 and Pimco All

-0.17

Correlation Coefficient

Nasdaq 100  Pimco All

Good diversification

The 3 months correlation between Nasdaq and Pimco is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Pimco All Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco All Asset and Nasdaq 100 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 Nasdaq 100 2x Strategy are associated (or correlated) with Pimco All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco All Asset has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Pimco All go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Pimco All

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 7.71 times more return on investment than Pimco All. However, Nasdaq 100 is 7.71 times more volatile than Pimco All Asset. It trades about 0.14 of its potential returns per unit of risk. Pimco All Asset is currently generating about 0.11 per unit of risk. If you would invest  40,281  in Nasdaq 100 2x Strategy on September 17, 2024 and sell it today you would earn a total of  2,764  from holding Nasdaq 100 2x Strategy or generate 6.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Nasdaq 100 2x Strategy  vs.  Pimco All Asset

Nasdaq 100 2x

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Nasdaq 100 showed solid returns over the last few months and may actually be approaching a breakup point.

Pimco All Asset

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nasdaq 100 and Pimco All

The main advantage of trading using opposite Nasdaq 100 and Pimco All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Pimco All 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 All will offset losses from the drop in Pimco All's long position.

The idea behind Nasdaq 100 2x Strategy and Pimco All Asset 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.