Correlation Between Pimco Global and Df Dent

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

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

Diversification Opportunities for Pimco Global and Df Dent

0.69

Correlation Coefficient

Pimco Global  Df Dent

Poor diversification

The 3 months correlation between Pimco and DFDSX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Global Multi Asset and Df Dent Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Df Dent Small and Pimco Global 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 Global Multi Asset are associated (or correlated) with Df Dent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Df Dent Small has no effect on the direction of Pimco Global i.e., Pimco Global and Df Dent go up and down completely randomly.

Pair Corralation between Pimco Global and Df Dent

Assuming the 90 days horizon Pimco Global is expected to generate 4.09 times less return on investment than Df Dent. But when comparing it to its historical volatility, Pimco Global Multi Asset is 2.53 times less risky than Df Dent. It trades about 0.12 of its potential returns per unit of risk. Df Dent Small is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,380  in Df Dent Small on September 3, 2024 and sell it today you would earn a total of  298.00  from holding Df Dent Small or generate 12.52% return on investment over 90 days.

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

Pimco Global Multi Asset  vs.  Df Dent Small

Pimco Global Multi

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Global Multi Asset are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Df Dent Small

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Df Dent Small are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Df Dent may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pimco Global and Df Dent

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

The idea behind Pimco Global Multi Asset and Df Dent 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.