Correlation Between Sp 500 and Pimco Dynamic

Can any of the company-specific risk be diversified away by investing in both Sp 500 and Pimco Dynamic 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 Sp 500 and Pimco Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sp 500 Index and Pimco Dynamic Income, you can compare the effects of market volatilities on Sp 500 and Pimco Dynamic 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 Sp 500 with a short position of Pimco Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp 500 and Pimco Dynamic.

Diversification Opportunities for Sp 500 and Pimco Dynamic

-0.36

Correlation Coefficient

Sp 500  Pimco Dynamic

Very good diversification

The 3 months correlation between USPRX and Pimco is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sp 500 Index and Pimco Dynamic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Dynamic Income and Sp 500 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 Sp 500 Index are associated (or correlated) with Pimco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Dynamic Income has no effect on the direction of Sp 500 i.e., Sp 500 and Pimco Dynamic go up and down completely randomly.

Pair Corralation between Sp 500 and Pimco Dynamic

Assuming the 90 days horizon Sp 500 Index is expected to under-perform the Pimco Dynamic. In addition to that, Sp 500 is 2.54 times more volatile than Pimco Dynamic Income. It trades about -0.07 of its total potential returns per unit of risk. Pimco Dynamic Income is currently generating about 0.44 per unit of volatility. If you would invest  1,787  in Pimco Dynamic Income on December 25, 2024 and sell it today you would earn a total of  199.00  from holding Pimco Dynamic Income or generate 11.14% return on investment over 90 days.

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

Sp 500 Index  vs.  Pimco Dynamic Income

Sp 500 Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sp 500 Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Sp 500 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Dynamic Income

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 34 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly unfluctuating fundamental indicators, Pimco Dynamic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sp 500 and Pimco Dynamic

The main advantage of trading using opposite Sp 500 and Pimco Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp 500 position performs unexpectedly, Pimco Dynamic 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 Dynamic will offset losses from the drop in Pimco Dynamic's long position.

The idea behind Sp 500 Index and Pimco Dynamic Income 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 CEOs Directory module to screen CEOs from public companies around the world.