Correlation Between Pimco Stocksplus and Fundamental Indexplus

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Can any of the company-specific risk be diversified away by investing in both Pimco Stocksplus and Fundamental Indexplus 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 Stocksplus and Fundamental Indexplus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Stocksplus Long and Fundamental Indexplus Tr, you can compare the effects of market volatilities on Pimco Stocksplus and Fundamental Indexplus 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 Stocksplus with a short position of Fundamental Indexplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Stocksplus and Fundamental Indexplus.

Diversification Opportunities for Pimco Stocksplus and Fundamental Indexplus

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Pimco and Fundamental is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Stocksplus Long and Fundamental Indexplus Tr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Indexplus and Pimco Stocksplus 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 Stocksplus Long are associated (or correlated) with Fundamental Indexplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Indexplus has no effect on the direction of Pimco Stocksplus i.e., Pimco Stocksplus and Fundamental Indexplus go up and down completely randomly.

Pair Corralation between Pimco Stocksplus and Fundamental Indexplus

Assuming the 90 days horizon Pimco Stocksplus Long is expected to generate 1.57 times more return on investment than Fundamental Indexplus. However, Pimco Stocksplus is 1.57 times more volatile than Fundamental Indexplus Tr. It trades about -0.12 of its potential returns per unit of risk. Fundamental Indexplus Tr is currently generating about -0.26 per unit of risk. If you would invest  1,793  in Pimco Stocksplus Long on September 27, 2024 and sell it today you would lose (61.00) from holding Pimco Stocksplus Long or give up 3.4% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Pimco Stocksplus Long  vs.  Fundamental Indexplus Tr

 Performance 
       Timeline  
Pimco Stocksplus Long 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pimco Stocksplus Long has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Pimco Stocksplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Fundamental Indexplus 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fundamental Indexplus Tr has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Fundamental Indexplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Stocksplus and Fundamental Indexplus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pimco Stocksplus and Fundamental Indexplus

The main advantage of trading using opposite Pimco Stocksplus and Fundamental Indexplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Stocksplus position performs unexpectedly, Fundamental Indexplus 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 Fundamental Indexplus will offset losses from the drop in Fundamental Indexplus' long position.
The idea behind Pimco Stocksplus Long and Fundamental Indexplus Tr 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.

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