Correlation Between Pimco Diversified and Stone Harbor

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

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

Diversification Opportunities for Pimco Diversified and Stone Harbor

-0.09

Correlation Coefficient

Pimco Diversified  Stone Harbor

Good diversification

The 3 months correlation between Pimco and Stone is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Diversified Income and Stone Harbor High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor High and Pimco Diversified 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 Diversified Income are associated (or correlated) with Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor High has no effect on the direction of Pimco Diversified i.e., Pimco Diversified and Stone Harbor go up and down completely randomly.

Pair Corralation between Pimco Diversified and Stone Harbor

Assuming the 90 days horizon Pimco Diversified Income is expected to generate 0.45 times more return on investment than Stone Harbor. However, Pimco Diversified Income is 2.2 times less risky than Stone Harbor. It trades about 0.11 of its potential returns per unit of risk. Stone Harbor High is currently generating about 0.0 per unit of risk. If you would invest  830.00  in Pimco Diversified Income on September 14, 2024 and sell it today you would earn a total of  148.00  from holding Pimco Diversified Income or generate 17.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	28.95%
Values	Daily Returns

Pimco Diversified Income  vs.  Stone Harbor High

Pimco Diversified Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Stone Harbor High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stone Harbor High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Stone Harbor 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 Diversified and Stone Harbor

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

The idea behind Pimco Diversified Income and Stone Harbor High 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.