Correlation Between Pimco Income and Pacific Capital

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

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

Diversification Opportunities for Pimco Income and Pacific Capital

0.14

Correlation Coefficient

Pimco Income  Pacific Capital

Average diversification

The 3 months correlation between Pimco and Pacific is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy and Pacific Capital Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Capital Tax and Pimco Income 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 Income Strategy are associated (or correlated) with Pacific Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Capital Tax has no effect on the direction of Pimco Income i.e., Pimco Income and Pacific Capital go up and down completely randomly.

Pair Corralation between Pimco Income and Pacific Capital

Considering the 90-day investment horizon Pimco Income is expected to generate 1.46 times less return on investment than Pacific Capital. In addition to that, Pimco Income is 4.61 times more volatile than Pacific Capital Tax Free. It trades about 0.07 of its total potential returns per unit of risk. Pacific Capital Tax Free is currently generating about 0.46 per unit of volatility. If you would invest  962.00  in Pacific Capital Tax Free on September 13, 2024 and sell it today you would earn a total of  8.00  from holding Pacific Capital Tax Free or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Pimco Income Strategy  vs.  Pacific Capital Tax Free

Pimco Income Strategy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy technical and fundamental indicators, Pimco Income is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pacific Capital Tax

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Capital Tax Free are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Pacific 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 Income and Pacific Capital

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

The idea behind Pimco Income Strategy and Pacific Capital Tax Free 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.