Correlation Between Short-term Fund and Pimco Mortgage

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

By analyzing existing cross correlation between Short Term Fund Institutional and Pimco Mortgage Opportunities, you can compare the effects of market volatilities on Short-term Fund and Pimco Mortgage 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 Short-term Fund with a short position of Pimco Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short-term Fund and Pimco Mortgage.

Diversification Opportunities for Short-term Fund and Pimco Mortgage

-0.79

Correlation Coefficient

Short-term Fund  Pimco Mortgage

Pay attention - limited upside

The 3 months correlation between Short-term and Pimco is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Fund Institutional and Pimco Mortgage Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Mortgage Oppor and Short-term Fund 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 Short Term Fund Institutional are associated (or correlated) with Pimco Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Mortgage Oppor has no effect on the direction of Short-term Fund i.e., Short-term Fund and Pimco Mortgage go up and down completely randomly.

Pair Corralation between Short-term Fund and Pimco Mortgage

Assuming the 90 days horizon Short Term Fund Institutional is expected to generate 0.43 times more return on investment than Pimco Mortgage. However, Short Term Fund Institutional is 2.34 times less risky than Pimco Mortgage. It trades about 0.22 of its potential returns per unit of risk. Pimco Mortgage Opportunities is currently generating about -0.07 per unit of risk. If you would invest  955.00  in Short Term Fund Institutional on September 5, 2024 and sell it today you would earn a total of  12.00  from holding Short Term Fund Institutional or generate 1.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Short Term Fund Institutional  vs.  Pimco Mortgage Opportunities

Short Term Fund

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Fund Institutional are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Short-term Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Mortgage Oppor

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Short-term Fund and Pimco Mortgage

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

The idea behind Short Term Fund Institutional and Pimco Mortgage Opportunities 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.