Correlation Between Pimco High and Midcap Sp

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

By analyzing existing cross correlation between Pimco High Yield and Midcap Sp 400, you can compare the effects of market volatilities on Pimco High and Midcap Sp 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 Midcap Sp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco High and Midcap Sp.

Diversification Opportunities for Pimco High and Midcap Sp

0.52

Correlation Coefficient

Pimco High  Midcap Sp

Very weak diversification

The 3 months correlation between Pimco and Midcap is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Pimco High Yield and Midcap Sp 400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Sp 400 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 Yield are associated (or correlated) with Midcap Sp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Sp 400 has no effect on the direction of Pimco High i.e., Pimco High and Midcap Sp go up and down completely randomly.

Pair Corralation between Pimco High and Midcap Sp

Assuming the 90 days horizon Pimco High Yield is expected to generate 0.21 times more return on investment than Midcap Sp. However, Pimco High Yield is 4.68 times less risky than Midcap Sp. It trades about 0.27 of its potential returns per unit of risk. Midcap Sp 400 is currently generating about 0.04 per unit of risk. If you would invest  904.00  in Pimco High Yield on May 14, 2025 and sell it today you would earn a total of  28.00  from holding Pimco High Yield or generate 3.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Pimco High Yield  vs.  Midcap Sp 400

Pimco High Yield

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco High Yield are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Midcap Sp 400

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Midcap Sp 400 are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Midcap Sp 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 Midcap Sp

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

The idea behind Pimco High Yield and Midcap Sp 400 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.