Correlation Between Pimco Fundamental and Short Term

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

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

Diversification Opportunities for Pimco Fundamental and Short Term

0.22

Correlation Coefficient

Pimco Fundamental  Short Term

Modest diversification

The 3 months correlation between Pimco and Short is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Fundamental Advantage and Short Term Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Fund and Pimco Fundamental 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 Fundamental Advantage are associated (or correlated) with Short Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Fund has no effect on the direction of Pimco Fundamental i.e., Pimco Fundamental and Short Term go up and down completely randomly.

Pair Corralation between Pimco Fundamental and Short Term

Assuming the 90 days horizon Pimco Fundamental Advantage is expected to under-perform the Short Term. In addition to that, Pimco Fundamental is 7.18 times more volatile than Short Term Fund A. It trades about -0.05 of its total potential returns per unit of risk. Short Term Fund A is currently generating about 0.21 per unit of volatility. If you would invest  958.00  in Short Term Fund A on May 4, 2025 and sell it today you would earn a total of  9.00  from holding Short Term Fund A or generate 0.94% return on investment over 90 days.

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

Pimco Fundamental Advantage  vs.  Short Term Fund A

Pimco Fundamental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pimco Fundamental Advantage has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Fundamental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Short Term Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Fund A are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short Term 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 Fundamental and Short Term

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

The idea behind Pimco Fundamental Advantage and Short Term Fund A 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.