Correlation Between PIMCO Tactical and PIMCO Multi

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

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

Diversification Opportunities for PIMCO Tactical and PIMCO Multi

0.67

Correlation Coefficient

PIMCO Tactical  PIMCO Multi

Poor diversification

The 3 months correlation between PIMCO and PIMCO is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Tactical Income and PIMCO Multi Sector Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Multi Sector and PIMCO Tactical 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 Tactical Income are associated (or correlated) with PIMCO Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Multi Sector has no effect on the direction of PIMCO Tactical i.e., PIMCO Tactical and PIMCO Multi go up and down completely randomly.

Pair Corralation between PIMCO Tactical and PIMCO Multi

Assuming the 90 days trading horizon PIMCO Tactical Income is expected to generate 1.1 times more return on investment than PIMCO Multi. However, PIMCO Tactical is 1.1 times more volatile than PIMCO Multi Sector Income. It trades about -0.25 of its potential returns per unit of risk. PIMCO Multi Sector Income is currently generating about -0.44 per unit of risk. If you would invest  705.00  in PIMCO Tactical Income on September 25, 2024 and sell it today you would lose (27.00) from holding PIMCO Tactical Income or give up 3.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

PIMCO Tactical Income  vs.  PIMCO Multi Sector Income

PIMCO Tactical Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PIMCO Tactical Income has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong forward indicators, PIMCO Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with PIMCO Tactical and PIMCO Multi

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

The idea behind PIMCO Tactical Income and PIMCO Multi Sector Income 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.