Correlation Between Reaves Utility and Pimco Income

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

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

Diversification Opportunities for Reaves Utility and Pimco Income

0.41

Correlation Coefficient

Reaves Utility  Pimco Income

Very weak diversification

The 3 months correlation between Reaves and Pimco is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Reaves Utility If and Pimco Income Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income Strategy and Reaves Utility 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 Reaves Utility If are associated (or correlated) with Pimco Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Income Strategy has no effect on the direction of Reaves Utility i.e., Reaves Utility and Pimco Income go up and down completely randomly.

Pair Corralation between Reaves Utility and Pimco Income

Considering the 90-day investment horizon Reaves Utility is expected to generate 1.45 times less return on investment than Pimco Income. In addition to that, Reaves Utility is 3.5 times more volatile than Pimco Income Strategy. It trades about 0.06 of its total potential returns per unit of risk. Pimco Income Strategy is currently generating about 0.29 per unit of volatility. If you would invest  808.00  in Pimco Income Strategy on December 27, 2024 and sell it today you would earn a total of  50.00  from holding Pimco Income Strategy or generate 6.19% return on investment over 90 days.

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

Reaves Utility If  vs.  Pimco Income Strategy

Reaves Utility If

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Reaves Utility If are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Reaves Utility is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pimco Income Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Pimco Income may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Reaves Utility and Pimco Income

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

The idea behind Reaves Utility If and Pimco Income Strategy 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.