Correlation Between Pimco Capital and Stocksplus

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

By analyzing existing cross correlation between Pimco Capital Sec and Stocksplus Tr Short, you can compare the effects of market volatilities on Pimco Capital and Stocksplus 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 Capital with a short position of Stocksplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Capital and Stocksplus.

Diversification Opportunities for Pimco Capital and Stocksplus

-0.73

Correlation Coefficient

Pimco Capital  Stocksplus

Pay attention - limited upside

The 3 months correlation between Pimco and Stocksplus is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Capital Sec and Stocksplus Tr Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stocksplus Tr Short and Pimco Capital 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 Capital Sec are associated (or correlated) with Stocksplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stocksplus Tr Short has no effect on the direction of Pimco Capital i.e., Pimco Capital and Stocksplus go up and down completely randomly.

Pair Corralation between Pimco Capital and Stocksplus

Assuming the 90 days horizon Pimco Capital Sec is expected to generate 0.25 times more return on investment than Stocksplus. However, Pimco Capital Sec is 4.05 times less risky than Stocksplus. It trades about 0.32 of its potential returns per unit of risk. Stocksplus Tr Short is currently generating about -0.09 per unit of risk. If you would invest  808.00  in Pimco Capital Sec on August 16, 2024 and sell it today you would earn a total of  129.00  from holding Pimco Capital Sec or generate 15.97% return on investment over 90 days.

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

Pimco Capital Sec  vs.  Stocksplus Tr Short

Pimco Capital Sec

Risk-Adjusted Performance

24 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Capital Sec are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stocksplus Tr Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stocksplus Tr Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Stocksplus 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 Capital and Stocksplus

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

The idea behind Pimco Capital Sec and Stocksplus Tr Short 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.