Correlation Between Fpa Crescent and Pimco Corporate

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

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

Diversification Opportunities for Fpa Crescent and Pimco Corporate

0.91

Correlation Coefficient

Fpa Crescent  Pimco Corporate

Almost no diversification

The 3 months correlation between Fpa and Pimco is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Fpa Crescent Fund and Pimco Corporate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Corporate Income and Fpa Crescent 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 Fpa Crescent Fund are associated (or correlated) with Pimco Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Corporate Income has no effect on the direction of Fpa Crescent i.e., Fpa Crescent and Pimco Corporate go up and down completely randomly.

Pair Corralation between Fpa Crescent and Pimco Corporate

Assuming the 90 days horizon Fpa Crescent is expected to generate 1.26 times less return on investment than Pimco Corporate. But when comparing it to its historical volatility, Fpa Crescent Fund is 1.54 times less risky than Pimco Corporate. It trades about 0.09 of its potential returns per unit of risk. Pimco Corporate Income is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,072  in Pimco Corporate Income on September 2, 2024 and sell it today you would earn a total of  401.00  from holding Pimco Corporate Income or generate 37.41% return on investment over 90 days.

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

Fpa Crescent Fund  vs.  Pimco Corporate Income

Fpa Crescent

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fpa Crescent Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Fpa Crescent is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Corporate Income

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Corporate Income are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Corporate is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fpa Crescent and Pimco Corporate

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

The idea behind Fpa Crescent Fund and Pimco Corporate 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.