Correlation Between Cambiar Small and Pimco Short-term

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

By analyzing existing cross correlation between Cambiar Small Cap and Pimco Short Term Fund, you can compare the effects of market volatilities on Cambiar Small and Pimco Short-term 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 Cambiar Small with a short position of Pimco Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambiar Small and Pimco Short-term.

Diversification Opportunities for Cambiar Small and Pimco Short-term

0.79

Correlation Coefficient

Cambiar Small  Pimco Short-term

Poor diversification

The 3 months correlation between Cambiar and Pimco is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cambiar Small Cap and Pimco Short Term Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Short Term and Cambiar Small 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 Cambiar Small Cap are associated (or correlated) with Pimco Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Short Term has no effect on the direction of Cambiar Small i.e., Cambiar Small and Pimco Short-term go up and down completely randomly.

Pair Corralation between Cambiar Small and Pimco Short-term

Assuming the 90 days horizon Cambiar Small Cap is expected to generate 12.36 times more return on investment than Pimco Short-term. However, Cambiar Small is 12.36 times more volatile than Pimco Short Term Fund. It trades about 0.16 of its potential returns per unit of risk. Pimco Short Term Fund is currently generating about 0.21 per unit of risk. If you would invest  1,640  in Cambiar Small Cap on September 4, 2024 and sell it today you would earn a total of  182.00  from holding Cambiar Small Cap or generate 11.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Cambiar Small Cap  vs.  Pimco Short Term Fund

Cambiar Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cambiar Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Cambiar Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pimco Short Term

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Short Term Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cambiar Small and Pimco Short-term

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

The idea behind Cambiar Small Cap and Pimco Short Term Fund 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.