Correlation Between Pimco Dynamic and Kennedy Capital

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

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

Diversification Opportunities for Pimco Dynamic and Kennedy Capital

-0.4

Correlation Coefficient

Pimco Dynamic  Kennedy Capital

Very good diversification

The 3 months correlation between Pimco and Kennedy is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Dynamic Income and Kennedy Capital Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kennedy Capital Small and Pimco Dynamic 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 Dynamic Income are associated (or correlated) with Kennedy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kennedy Capital Small has no effect on the direction of Pimco Dynamic i.e., Pimco Dynamic and Kennedy Capital go up and down completely randomly.

Pair Corralation between Pimco Dynamic and Kennedy Capital

Considering the 90-day investment horizon Pimco Dynamic Income is expected to generate 0.66 times more return on investment than Kennedy Capital. However, Pimco Dynamic Income is 1.52 times less risky than Kennedy Capital. It trades about 0.07 of its potential returns per unit of risk. Kennedy Capital Small is currently generating about 0.04 per unit of risk. If you would invest  1,397  in Pimco Dynamic Income on September 20, 2024 and sell it today you would earn a total of  454.00  from holding Pimco Dynamic Income or generate 32.5% return on investment over 90 days.

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

Pimco Dynamic Income  vs.  Kennedy Capital Small

Pimco Dynamic Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Dynamic Income has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong fundamental indicators, Pimco Dynamic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Kennedy Capital Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kennedy Capital Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Kennedy Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pimco Dynamic and Kennedy Capital

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

The idea behind Pimco Dynamic Income and Kennedy Capital Small 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.