Correlation Between Pimco Energy and Large Capitalization

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

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

Diversification Opportunities for Pimco Energy and Large Capitalization

0.85

Correlation Coefficient

Pimco Energy  Large Capitalization

Very poor diversification

The 3 months correlation between Pimco and Large is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Energy Tactical and Large Capitalization Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Capitalization and Pimco Energy 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 Energy Tactical are associated (or correlated) with Large Capitalization. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Capitalization has no effect on the direction of Pimco Energy i.e., Pimco Energy and Large Capitalization go up and down completely randomly.

Pair Corralation between Pimco Energy and Large Capitalization

Considering the 90-day investment horizon Pimco Energy is expected to generate 1.31 times less return on investment than Large Capitalization. In addition to that, Pimco Energy is 1.17 times more volatile than Large Capitalization Growth. It trades about 0.18 of its total potential returns per unit of risk. Large Capitalization Growth is currently generating about 0.28 per unit of volatility. If you would invest  497.00  in Large Capitalization Growth on May 3, 2025 and sell it today you would earn a total of  82.00  from holding Large Capitalization Growth or generate 16.5% return on investment over 90 days.

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

Pimco Energy Tactical  vs.  Large Capitalization Growth

Pimco Energy Tactical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Energy Tactical are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Pimco Energy may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Large Capitalization

Risk-Adjusted Performance

Solid

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

Pair Trading with Pimco Energy and Large Capitalization

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

The idea behind Pimco Energy Tactical and Large Capitalization Growth 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.

Check out your portfolio center.

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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.