Correlation Between Pimco Income and XAI Octagon

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

Diversification Opportunities for Pimco Income and XAI Octagon

0.47

Correlation Coefficient

Pimco Income  XAI Octagon

Very weak diversification

The 3 months correlation between Pimco and XAI is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy and XAI Octagon Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAI Octagon Floating 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 XAI Octagon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAI Octagon Floating has no effect on the direction of Pimco Income i.e., Pimco Income and XAI Octagon go up and down completely randomly.

Pair Corralation between Pimco Income and XAI Octagon

Considering the 90-day investment horizon Pimco Income is expected to generate 1.27 times less return on investment than XAI Octagon. But when comparing it to its historical volatility, Pimco Income Strategy is 1.11 times less risky than XAI Octagon. It trades about 0.09 of its potential returns per unit of risk. XAI Octagon Floating is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  530.00  in XAI Octagon Floating on August 31, 2024 and sell it today you would earn a total of  175.00  from holding XAI Octagon Floating or generate 33.02% return on investment over 90 days.

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

Pimco Income Strategy  vs.  XAI Octagon Floating

Pimco Income Strategy

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 15 (%) 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 recent stock price disarray, may contribute to short-term losses for the investors.

XAI Octagon Floating

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in XAI Octagon Floating are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, XAI Octagon is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pimco Income and XAI Octagon

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

The idea behind Pimco Income Strategy and XAI Octagon Floating 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.