Correlation Between Pimco Small and Jackson Square

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

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

Diversification Opportunities for Pimco Small and Jackson Square

0.98

Correlation Coefficient

Pimco Small  Jackson Square

Almost no diversification

The 3 months correlation between Pimco and Jackson is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Small Cap and Jackson Square Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Square Smid and Pimco Small 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 Small Cap are associated (or correlated) with Jackson Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackson Square Smid has no effect on the direction of Pimco Small i.e., Pimco Small and Jackson Square go up and down completely randomly.

Pair Corralation between Pimco Small and Jackson Square

Assuming the 90 days horizon Pimco Small Cap is expected to generate 1.08 times more return on investment than Jackson Square. However, Pimco Small is 1.08 times more volatile than Jackson Square Smid Cap. It trades about 0.13 of its potential returns per unit of risk. Jackson Square Smid Cap is currently generating about 0.14 per unit of risk. If you would invest  778.00  in Pimco Small Cap on September 13, 2024 and sell it today you would earn a total of  80.00  from holding Pimco Small Cap or generate 10.28% return on investment over 90 days.

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

Pimco Small Cap  vs.  Jackson Square Smid Cap

Pimco Small Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Small Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pimco Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Jackson Square Smid

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jackson Square Smid Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Jackson Square may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pimco Small and Jackson Square

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

The idea behind Pimco Small Cap and Jackson Square Smid Cap 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.