Correlation Between Pimco New and Invesco Van

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

By analyzing existing cross correlation between Pimco New York and Invesco Van Kampen, you can compare the effects of market volatilities on Pimco New and Invesco Van 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 New with a short position of Invesco Van. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco New and Invesco Van.

Diversification Opportunities for Pimco New and Invesco Van

0.68

Correlation Coefficient

Pimco New  Invesco Van

Poor diversification

The 3 months correlation between Pimco and Invesco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York and Invesco Van Kampen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Van Kampen and Pimco New 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 New York are associated (or correlated) with Invesco Van. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Van Kampen has no effect on the direction of Pimco New i.e., Pimco New and Invesco Van go up and down completely randomly.

Pair Corralation between Pimco New and Invesco Van

Considering the 90-day investment horizon Pimco New York is expected to generate 0.97 times more return on investment than Invesco Van. However, Pimco New York is 1.03 times less risky than Invesco Van. It trades about 0.03 of its potential returns per unit of risk. Invesco Van Kampen is currently generating about -0.11 per unit of risk. If you would invest  792.00  in Pimco New York on September 3, 2024 and sell it today you would earn a total of  9.00  from holding Pimco New York or generate 1.14% return on investment over 90 days.

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

Pimco New York  vs.  Invesco Van Kampen

Pimco New York

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco New York are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Pimco New is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Invesco Van Kampen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Van Kampen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Invesco Van is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pimco New and Invesco Van

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

The idea behind Pimco New York and Invesco Van Kampen 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.