Correlation Between Pcm Fund and Pimco Income

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

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

Diversification Opportunities for Pcm Fund and Pimco Income

0.41

Correlation Coefficient

Pcm Fund  Pimco Income

Very weak diversification

The 3 months correlation between Pcm and Pimco is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Pcm Fund and Pimco Income Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income Strategy and Pcm Fund 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 Pcm Fund are associated (or correlated) with Pimco Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Income Strategy has no effect on the direction of Pcm Fund i.e., Pcm Fund and Pimco Income go up and down completely randomly.

Pair Corralation between Pcm Fund and Pimco Income

Considering the 90-day investment horizon Pcm Fund is expected to generate 1.8 times more return on investment than Pimco Income. However, Pcm Fund is 1.8 times more volatile than Pimco Income Strategy. It trades about 0.24 of its potential returns per unit of risk. Pimco Income Strategy is currently generating about 0.04 per unit of risk. If you would invest  807.00  in Pcm Fund on February 21, 2024 and sell it today you would earn a total of  92.00  from holding Pcm Fund or generate 11.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.62%
Values	Daily Returns

Pcm Fund  vs.  Pimco Income Strategy

Pcm Fund

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pcm Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unsteady fundamental indicators, Pcm Fund may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pimco Income Strategy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Pimco Income is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Pcm Fund and Pimco Income

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

The idea behind Pcm Fund and Pimco Income Strategy 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.