Correlation Between Pimco High and Cornerstone Strategic

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

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

Diversification Opportunities for Pimco High and Cornerstone Strategic

0.56

Correlation Coefficient

Pimco High  Cornerstone Strategic

Very weak diversification

The 3 months correlation between Pimco and Cornerstone is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Pimco High Income and Cornerstone Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic and Pimco High 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 High Income are associated (or correlated) with Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of Pimco High i.e., Pimco High and Cornerstone Strategic go up and down completely randomly.

Pair Corralation between Pimco High and Cornerstone Strategic

Considering the 90-day investment horizon Pimco High Income is expected to generate 0.55 times more return on investment than Cornerstone Strategic. However, Pimco High Income is 1.83 times less risky than Cornerstone Strategic. It trades about -0.01 of its potential returns per unit of risk. Cornerstone Strategic Value is currently generating about -0.12 per unit of risk. If you would invest  477.00  in Pimco High Income on January 27, 2025 and sell it today you would lose (6.00) from holding Pimco High Income or give up 1.26% of portfolio value over 90 days.

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

Pimco High Income  vs.  Cornerstone Strategic Value

Pimco High Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pimco High Income has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent technical indicators, Pimco High is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Cornerstone Strategic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cornerstone Strategic Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the fund investors.

Pair Trading with Pimco High and Cornerstone Strategic

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

The idea behind Pimco High Income and Cornerstone Strategic Value 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.