Correlation Between XAI Octagon and Pimco California

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

By analyzing existing cross correlation between XAI Octagon Floating and Pimco California Municipal, you can compare the effects of market volatilities on XAI Octagon and Pimco California 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 XAI Octagon with a short position of Pimco California. Check out your portfolio center. Please also check ongoing floating volatility patterns of XAI Octagon and Pimco California.

Diversification Opportunities for XAI Octagon and Pimco California

-0.64

Correlation Coefficient

XAI Octagon  Pimco California

Excellent diversification

The 3 months correlation between XAI and Pimco is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding XAI Octagon Floating and Pimco California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco California Mun and XAI Octagon 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 XAI Octagon Floating are associated (or correlated) with Pimco California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco California Mun has no effect on the direction of XAI Octagon i.e., XAI Octagon and Pimco California go up and down completely randomly.

Pair Corralation between XAI Octagon and Pimco California

Given the investment horizon of 90 days XAI Octagon Floating is expected to generate 1.13 times more return on investment than Pimco California. However, XAI Octagon is 1.13 times more volatile than Pimco California Municipal. It trades about 0.06 of its potential returns per unit of risk. Pimco California Municipal is currently generating about 0.04 per unit of risk. If you would invest  666.00  in XAI Octagon Floating on September 5, 2024 and sell it today you would earn a total of  17.00  from holding XAI Octagon Floating or generate 2.55% return on investment over 90 days.

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

XAI Octagon Floating  vs.  Pimco California Municipal

XAI Octagon Floating

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in XAI Octagon Floating are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, XAI Octagon is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pimco California Mun

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco California Municipal are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent fundamental indicators, Pimco California is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with XAI Octagon and Pimco California

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

The idea behind XAI Octagon Floating and Pimco California Municipal 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.