Correlation Between Pimco Moditiesplus and Pax Large

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

By analyzing existing cross correlation between Pimco Moditiesplus Strategy and Pax Large Cap, you can compare the effects of market volatilities on Pimco Moditiesplus and Pax Large 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 Moditiesplus with a short position of Pax Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Moditiesplus and Pax Large.

Diversification Opportunities for Pimco Moditiesplus and Pax Large

0.79

Correlation Coefficient

Pimco Moditiesplus  Pax Large

Poor diversification

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

Pair Corralation between Pimco Moditiesplus and Pax Large

Assuming the 90 days horizon Pimco Moditiesplus is expected to generate 2.3 times less return on investment than Pax Large. In addition to that, Pimco Moditiesplus is 1.29 times more volatile than Pax Large Cap. It trades about 0.1 of its total potential returns per unit of risk. Pax Large Cap is currently generating about 0.29 per unit of volatility. If you would invest  1,195  in Pax Large Cap on May 6, 2025 and sell it today you would earn a total of  170.00  from holding Pax Large Cap or generate 14.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Pimco Moditiesplus Strategy  vs.  Pax Large Cap

Pimco Moditiesplus

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Moditiesplus Strategy are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Moditiesplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pax Large Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pax Large Cap are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Pax Large showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pimco Moditiesplus and Pax Large

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

The idea behind Pimco Moditiesplus Strategy and Pax Large Cap 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.