Correlation Between PIMCO Broad and Ionic Inflation

Can any of the company-specific risk be diversified away by investing in both PIMCO Broad and Ionic Inflation 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 Broad and Ionic Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PIMCO Broad TIPS and Ionic Inflation Protection, you can compare the effects of market volatilities on PIMCO Broad and Ionic Inflation 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 Broad with a short position of Ionic Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Broad and Ionic Inflation.

Diversification Opportunities for PIMCO Broad and Ionic Inflation

-0.91

Correlation Coefficient

PIMCO Broad  Ionic Inflation

Pay attention - limited upside

The 3 months correlation between PIMCO and Ionic is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Broad TIPS and Ionic Inflation Protection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ionic Inflation Prot and PIMCO Broad 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 Broad TIPS are associated (or correlated) with Ionic Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ionic Inflation Prot has no effect on the direction of PIMCO Broad i.e., PIMCO Broad and Ionic Inflation go up and down completely randomly.

Pair Corralation between PIMCO Broad and Ionic Inflation

Given the investment horizon of 90 days PIMCO Broad is expected to generate 15.58 times less return on investment than Ionic Inflation. In addition to that, PIMCO Broad is 1.03 times more volatile than Ionic Inflation Protection. It trades about 0.0 of its total potential returns per unit of risk. Ionic Inflation Protection is currently generating about 0.07 per unit of volatility. If you would invest  1,913  in Ionic Inflation Protection on September 21, 2024 and sell it today you would earn a total of  45.00  from holding Ionic Inflation Protection or generate 2.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

PIMCO Broad TIPS  vs.  Ionic Inflation Protection

PIMCO Broad TIPS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ionic Inflation Prot

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ionic Inflation Protection are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Ionic Inflation is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with PIMCO Broad and Ionic Inflation

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

The idea behind PIMCO Broad TIPS and Ionic Inflation Protection 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.