Correlation Between SWK Holdings and Pimco New

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

By analyzing existing cross correlation between SWK Holdings Corp and Pimco New York, you can compare the effects of market volatilities on SWK Holdings and Pimco New 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 SWK Holdings with a short position of Pimco New. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWK Holdings and Pimco New.

Diversification Opportunities for SWK Holdings and Pimco New

0.71

Correlation Coefficient

SWK Holdings  Pimco New

Poor diversification

The 3 months correlation between SWK and Pimco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding SWK Holdings Corp and Pimco New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco New York and SWK Holdings 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 SWK Holdings Corp are associated (or correlated) with Pimco New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco New York has no effect on the direction of SWK Holdings i.e., SWK Holdings and Pimco New go up and down completely randomly.

Pair Corralation between SWK Holdings and Pimco New

Given the investment horizon of 90 days SWK Holdings Corp is expected to under-perform the Pimco New. In addition to that, SWK Holdings is 2.16 times more volatile than Pimco New York. It trades about -0.02 of its total potential returns per unit of risk. Pimco New York is currently generating about 0.0 per unit of volatility. If you would invest  754.00  in Pimco New York on December 18, 2024 and sell it today you would lose (1.00) from holding Pimco New York or give up 0.13% of portfolio value over 90 days.

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

SWK Holdings Corp  vs.  Pimco New York

SWK Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days SWK Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, SWK Holdings is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pimco New York

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pimco New York has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Pimco New is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SWK Holdings and Pimco New

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

The idea behind SWK Holdings Corp and Pimco New York 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 Global Correlations module to find global opportunities by holding instruments from different markets.