Correlation Between Ford and PIMCO Tactical

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

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

Diversification Opportunities for Ford and PIMCO Tactical

0.33

Correlation Coefficient

Ford  PIMCO Tactical

Weak diversification

The 3 months correlation between Ford and PIMCO is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PIMCO Tactical Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Tactical Income and Ford 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 Ford Motor are associated (or correlated) with PIMCO Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Tactical Income has no effect on the direction of Ford i.e., Ford and PIMCO Tactical go up and down completely randomly.

Pair Corralation between Ford and PIMCO Tactical

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the PIMCO Tactical. In addition to that, Ford is 3.43 times more volatile than PIMCO Tactical Income. It trades about -0.04 of its total potential returns per unit of risk. PIMCO Tactical Income is currently generating about -0.04 per unit of volatility. If you would invest  770.00  in PIMCO Tactical Income on September 27, 2024 and sell it today you would lose (12.00) from holding PIMCO Tactical Income or give up 1.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Ford Motor  vs.  PIMCO Tactical Income

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

PIMCO Tactical Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PIMCO Tactical Income has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, PIMCO Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and PIMCO Tactical

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

The idea behind Ford Motor and PIMCO Tactical 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.

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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.