Correlation Between PIMCO Mortgage and Dimensional Targeted

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

By analyzing existing cross correlation between PIMCO Mortgage Backed Securities and Dimensional Targeted Value, you can compare the effects of market volatilities on PIMCO Mortgage and Dimensional Targeted 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 Mortgage with a short position of Dimensional Targeted. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Mortgage and Dimensional Targeted.

Diversification Opportunities for PIMCO Mortgage and Dimensional Targeted

0.76

Correlation Coefficient

PIMCO Mortgage  Dimensional Targeted

Poor diversification

The 3 months correlation between PIMCO and Dimensional is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Mortgage Backed Securiti and Dimensional Targeted Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Targeted and PIMCO Mortgage 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 Mortgage Backed Securities are associated (or correlated) with Dimensional Targeted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Targeted has no effect on the direction of PIMCO Mortgage i.e., PIMCO Mortgage and Dimensional Targeted go up and down completely randomly.

Pair Corralation between PIMCO Mortgage and Dimensional Targeted

Given the investment horizon of 90 days PIMCO Mortgage is expected to generate 3.26 times less return on investment than Dimensional Targeted. But when comparing it to its historical volatility, PIMCO Mortgage Backed Securities is 4.09 times less risky than Dimensional Targeted. It trades about 0.2 of its potential returns per unit of risk. Dimensional Targeted Value is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  5,248  in Dimensional Targeted Value on May 25, 2025 and sell it today you would earn a total of  627.00  from holding Dimensional Targeted Value or generate 11.95% return on investment over 90 days.

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

PIMCO Mortgage Backed Securiti  vs.  Dimensional Targeted Value

PIMCO Mortgage Backed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Mortgage Backed Securities are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, PIMCO Mortgage is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Dimensional Targeted

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional Targeted Value are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Dimensional Targeted may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with PIMCO Mortgage and Dimensional Targeted

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

The idea behind PIMCO Mortgage Backed Securities and Dimensional Targeted 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.