Correlation Between PIMCO Multi and RBC Select

Can any of the company-specific risk be diversified away by investing in both PIMCO Multi and RBC Select 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 Multi and RBC Select into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PIMCO Multi Sector Income and RBC Select Balanced, you can compare the effects of market volatilities on PIMCO Multi and RBC Select 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 Multi with a short position of RBC Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Multi and RBC Select.

Diversification Opportunities for PIMCO Multi and RBC Select

-0.48

Correlation Coefficient

PIMCO Multi  RBC Select

Very good diversification

The 3 months correlation between PIMCO and RBC is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Multi Sector Income and RBC Select Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Select Balanced and PIMCO Multi 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 Multi Sector Income are associated (or correlated) with RBC Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Select Balanced has no effect on the direction of PIMCO Multi i.e., PIMCO Multi and RBC Select go up and down completely randomly.

Pair Corralation between PIMCO Multi and RBC Select

Assuming the 90 days trading horizon PIMCO Multi Sector Income is expected to under-perform the RBC Select. In addition to that, PIMCO Multi is 1.85 times more volatile than RBC Select Balanced. It trades about -0.16 of its total potential returns per unit of risk. RBC Select Balanced is currently generating about 0.1 per unit of volatility. If you would invest  3,420  in RBC Select Balanced on September 25, 2024 and sell it today you would earn a total of  79.00  from holding RBC Select Balanced or generate 2.31% return on investment over 90 days.

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

PIMCO Multi Sector Income  vs.  RBC Select Balanced

PIMCO Multi Sector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PIMCO Multi Sector Income has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

RBC Select Balanced

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Select Balanced are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, RBC Select 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 Multi and RBC Select

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

The idea behind PIMCO Multi Sector Income and RBC Select Balanced 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.