Correlation Between Pimco High and Multi Index

Can any of the company-specific risk be diversified away by investing in both Pimco High and Multi Index 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 Multi Index 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 Multi Index 2020 Lifetime, you can compare the effects of market volatilities on Pimco High and Multi Index 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 Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco High and Multi Index.

Diversification Opportunities for Pimco High and Multi Index

0.94

Correlation Coefficient

Pimco High  Multi Index

Almost no diversification

The 3 months correlation between Pimco and Multi is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pimco High Income and Multi Index 2020 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2020 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 Multi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2020 has no effect on the direction of Pimco High i.e., Pimco High and Multi Index go up and down completely randomly.

Pair Corralation between Pimco High and Multi Index

Considering the 90-day investment horizon Pimco High Income is expected to generate 1.14 times more return on investment than Multi Index. However, Pimco High is 1.14 times more volatile than Multi Index 2020 Lifetime. It trades about 0.21 of its potential returns per unit of risk. Multi Index 2020 Lifetime is currently generating about 0.24 per unit of risk. If you would invest  464.00  in Pimco High Income on May 2, 2025 and sell it today you would earn a total of  22.00  from holding Pimco High Income or generate 4.74% return on investment over 90 days.

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

Pimco High Income  vs.  Multi Index 2020 Lifetime

Pimco High Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco High Income are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. 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.

Multi Index 2020

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Index 2020 Lifetime are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multi Index 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 High and Multi Index

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

The idea behind Pimco High Income and Multi Index 2020 Lifetime 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.