Correlation Between PIMCO Monthly and Brookfield

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

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

Diversification Opportunities for PIMCO Monthly and Brookfield

0.02

Correlation Coefficient

PIMCO Monthly  Brookfield

Significant diversification

The 3 months correlation between PIMCO and Brookfield is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Monthly Income and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield and PIMCO Monthly 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 Monthly Income are associated (or correlated) with Brookfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield has no effect on the direction of PIMCO Monthly i.e., PIMCO Monthly and Brookfield go up and down completely randomly.

Pair Corralation between PIMCO Monthly and Brookfield

Assuming the 90 days trading horizon PIMCO Monthly Income is expected to under-perform the Brookfield. But the fund apears to be less risky and, when comparing its historical volatility, PIMCO Monthly Income is 3.02 times less risky than Brookfield. The fund trades about -0.2 of its potential returns per unit of risk. The Brookfield is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,281  in Brookfield on September 23, 2024 and sell it today you would earn a total of  108.00  from holding Brookfield or generate 4.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

PIMCO Monthly Income  vs.  Brookfield

PIMCO Monthly Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PIMCO Monthly Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, PIMCO Monthly is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Brookfield

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brookfield is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PIMCO Monthly and Brookfield

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

The idea behind PIMCO Monthly Income and Brookfield 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.