Correlation Between ClimateRock and PIMCO Access

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

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

Diversification Opportunities for ClimateRock and PIMCO Access

0.43

Correlation Coefficient

ClimateRock  PIMCO Access

Very weak diversification

The 3 months correlation between ClimateRock and PIMCO is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ClimateRock Class A and PIMCO Access Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Access Income and ClimateRock 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 ClimateRock Class A are associated (or correlated) with PIMCO Access. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Access Income has no effect on the direction of ClimateRock i.e., ClimateRock and PIMCO Access go up and down completely randomly.

Pair Corralation between ClimateRock and PIMCO Access

Given the investment horizon of 90 days ClimateRock is expected to generate 9.8 times less return on investment than PIMCO Access. But when comparing it to its historical volatility, ClimateRock Class A is 13.79 times less risky than PIMCO Access. It trades about 0.2 of its potential returns per unit of risk. PIMCO Access Income is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,552  in PIMCO Access Income on August 31, 2024 and sell it today you would earn a total of  132.00  from holding PIMCO Access Income or generate 8.51% return on investment over 90 days.

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

ClimateRock Class A  vs.  PIMCO Access Income

ClimateRock Class

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ClimateRock Class A are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ClimateRock is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

PIMCO Access Income

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Access Income are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, PIMCO Access may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ClimateRock and PIMCO Access

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

The idea behind ClimateRock Class A and PIMCO Access Income 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.