Correlation Between Visa and PIMCO Monthly

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

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

Diversification Opportunities for Visa and PIMCO Monthly

-0.05

Correlation Coefficient

Visa  PIMCO Monthly

Good diversification

The 3 months correlation between Visa and PIMCO is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and PIMCO Monthly Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Monthly Income and Visa 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 Visa Class A are associated (or correlated) with PIMCO Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Monthly Income has no effect on the direction of Visa i.e., Visa and PIMCO Monthly go up and down completely randomly.

Pair Corralation between Visa and PIMCO Monthly

Taking into account the 90-day investment horizon Visa Class A is expected to generate 5.59 times more return on investment than PIMCO Monthly. However, Visa is 5.59 times more volatile than PIMCO Monthly Income. It trades about 0.12 of its potential returns per unit of risk. PIMCO Monthly Income is currently generating about 0.03 per unit of risk. If you would invest  28,680  in Visa Class A on September 13, 2024 and sell it today you would earn a total of  2,743  from holding Visa Class A or generate 9.56% return on investment over 90 days.

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

Visa Class A  vs.  PIMCO Monthly Income

Visa Class A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PIMCO Monthly Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Monthly Income are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, PIMCO Monthly is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Visa and PIMCO Monthly

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

The idea behind Visa Class A and PIMCO Monthly 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.