Correlation Between PIMCO Monthly and RBC Discount

Can any of the company-specific risk be diversified away by investing in both PIMCO Monthly and RBC Discount 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 RBC Discount 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 RBC Discount Bond, you can compare the effects of market volatilities on PIMCO Monthly and RBC Discount 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 RBC Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Monthly and RBC Discount.

Diversification Opportunities for PIMCO Monthly and RBC Discount

-0.58

Correlation Coefficient

PIMCO Monthly  RBC Discount

Excellent diversification

The 3 months correlation between PIMCO and RBC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Monthly Income and RBC Discount Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Discount Bond 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 RBC Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Discount Bond has no effect on the direction of PIMCO Monthly i.e., PIMCO Monthly and RBC Discount go up and down completely randomly.

Pair Corralation between PIMCO Monthly and RBC Discount

Assuming the 90 days trading horizon PIMCO Monthly is expected to generate 22.11 times less return on investment than RBC Discount. But when comparing it to its historical volatility, PIMCO Monthly Income is 1.35 times less risky than RBC Discount. It trades about 0.01 of its potential returns per unit of risk. RBC Discount Bond is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,974  in RBC Discount Bond on September 23, 2024 and sell it today you would earn a total of  221.00  from holding RBC Discount Bond or generate 11.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.63%
Values	Daily Returns

PIMCO Monthly Income  vs.  RBC Discount Bond

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.

RBC Discount Bond

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Discount Bond are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, RBC Discount is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PIMCO Monthly and RBC Discount

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

The idea behind PIMCO Monthly Income and RBC Discount Bond 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.