Correlation Between Pimco Rae and Pimco Dividend

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

By analyzing existing cross correlation between Pimco Rae Worldwide and Pimco Dividend And, you can compare the effects of market volatilities on Pimco Rae and Pimco Dividend 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 Rae with a short position of Pimco Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Rae and Pimco Dividend.

Diversification Opportunities for Pimco Rae and Pimco Dividend

0.87

Correlation Coefficient

Pimco Rae  Pimco Dividend

Very poor diversification

The 3 months correlation between Pimco and Pimco is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Worldwide and Pimco Dividend And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Dividend And and Pimco Rae 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 Rae Worldwide are associated (or correlated) with Pimco Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Dividend And has no effect on the direction of Pimco Rae i.e., Pimco Rae and Pimco Dividend go up and down completely randomly.

Pair Corralation between Pimco Rae and Pimco Dividend

Assuming the 90 days horizon Pimco Rae Worldwide is expected to under-perform the Pimco Dividend. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Rae Worldwide is 1.18 times less risky than Pimco Dividend. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Pimco Dividend And is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  1,236  in Pimco Dividend And on February 3, 2024 and sell it today you would lose (16.00) from holding Pimco Dividend And or give up 1.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Pimco Rae Worldwide  vs.  Pimco Dividend And

Pimco Rae Worldwide

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Rae Worldwide are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Pimco Rae is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Dividend And

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dividend And are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Pimco Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pimco Rae and Pimco Dividend

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

The idea behind Pimco Rae Worldwide and Pimco Dividend And 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.