Correlation Between Pimco Diversified and Victory Special

Can any of the company-specific risk be diversified away by investing in both Pimco Diversified and Victory Special 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 Victory Special 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 Victory Special Value, you can compare the effects of market volatilities on Pimco Diversified and Victory Special 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 Victory Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Diversified and Victory Special.

Diversification Opportunities for Pimco Diversified and Victory Special

0.02

Correlation Coefficient

Pimco Diversified  Victory Special

Significant diversification

The 3 months correlation between Pimco and Victory is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Diversified Income and Victory Special Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Special Value 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 Victory Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Special Value has no effect on the direction of Pimco Diversified i.e., Pimco Diversified and Victory Special go up and down completely randomly.

Pair Corralation between Pimco Diversified and Victory Special

Assuming the 90 days horizon Pimco Diversified Income is expected to under-perform the Victory Special. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Diversified Income is 3.88 times less risky than Victory Special. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Victory Special Value is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,051  in Victory Special Value on September 17, 2024 and sell it today you would earn a total of  251.00  from holding Victory Special Value or generate 8.23% return on investment over 90 days.

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

Pimco Diversified Income  vs.  Victory Special Value

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.

Victory Special Value

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Special Value are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Victory Special may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pimco Diversified and Victory Special

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

The idea behind Pimco Diversified Income and Victory Special Value 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.