Correlation Between Ultrashort Latin and Pimco Stocksplus

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

By analyzing existing cross correlation between Ultrashort Latin America and Pimco Stocksplus Short, you can compare the effects of market volatilities on Ultrashort Latin and Pimco Stocksplus 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 Ultrashort Latin with a short position of Pimco Stocksplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultrashort Latin and Pimco Stocksplus.

Diversification Opportunities for Ultrashort Latin and Pimco Stocksplus

-0.21

Correlation Coefficient

Ultrashort Latin  Pimco Stocksplus

Very good diversification

The 3 months correlation between Ultrashort and Pimco is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ultrashort Latin America and Pimco Stocksplus Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Stocksplus Short and Ultrashort Latin 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 Ultrashort Latin America are associated (or correlated) with Pimco Stocksplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Stocksplus Short has no effect on the direction of Ultrashort Latin i.e., Ultrashort Latin and Pimco Stocksplus go up and down completely randomly.

Pair Corralation between Ultrashort Latin and Pimco Stocksplus

Assuming the 90 days horizon Ultrashort Latin America is expected to generate 3.02 times more return on investment than Pimco Stocksplus. However, Ultrashort Latin is 3.02 times more volatile than Pimco Stocksplus Short. It trades about 0.11 of its potential returns per unit of risk. Pimco Stocksplus Short is currently generating about 0.17 per unit of risk. If you would invest  4,620  in Ultrashort Latin America on October 9, 2024 and sell it today you would earn a total of  255.00  from holding Ultrashort Latin America or generate 5.52% return on investment over 90 days.

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

Ultrashort Latin America  vs.  Pimco Stocksplus Short

Ultrashort Latin America

Risk-Adjusted Performance

8 of 100

OK

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

Pimco Stocksplus Short

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Stocksplus Short are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Stocksplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ultrashort Latin and Pimco Stocksplus

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

The idea behind Ultrashort Latin America and Pimco Stocksplus Short 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.