Correlation Between Pimco Dynamic and CSWI Old

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

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

Diversification Opportunities for Pimco Dynamic and CSWI Old

0.53

Correlation Coefficient

Pimco Dynamic  CSWI Old

Very weak diversification

The 3 months correlation between Pimco and CSWI is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Dynamic Income and CSWI Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSWI Old and Pimco Dynamic 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 Dynamic Income are associated (or correlated) with CSWI Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSWI Old has no effect on the direction of Pimco Dynamic i.e., Pimco Dynamic and CSWI Old go up and down completely randomly.

Pair Corralation between Pimco Dynamic and CSWI Old

Considering the 90-day investment horizon Pimco Dynamic Income is expected to generate 0.18 times more return on investment than CSWI Old. However, Pimco Dynamic Income is 5.49 times less risky than CSWI Old. It trades about 0.09 of its potential returns per unit of risk. CSWI Old is currently generating about -0.05 per unit of risk. If you would invest  1,320  in Pimco Dynamic Income on May 1, 2025 and sell it today you would earn a total of  30.00  from holding Pimco Dynamic Income or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	43.55%
Values	Daily Returns

Pimco Dynamic Income  vs.  CSWI Old

Pimco Dynamic Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Pimco Dynamic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CSWI Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days CSWI Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Pimco Dynamic and CSWI Old

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

The idea behind Pimco Dynamic Income and CSWI Old 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.