Correlation Between Pimco Income and Magic Empire

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

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

Diversification Opportunities for Pimco Income and Magic Empire

-0.09

Correlation Coefficient

Pimco Income  Magic Empire

Good diversification

The 3 months correlation between Pimco and Magic is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy and Magic Empire Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Empire Global and Pimco Income 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 Income Strategy are associated (or correlated) with Magic Empire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Empire Global has no effect on the direction of Pimco Income i.e., Pimco Income and Magic Empire go up and down completely randomly.

Pair Corralation between Pimco Income and Magic Empire

Considering the 90-day investment horizon Pimco Income is expected to generate 11.6 times less return on investment than Magic Empire. But when comparing it to its historical volatility, Pimco Income Strategy is 15.7 times less risky than Magic Empire. It trades about 0.25 of its potential returns per unit of risk. Magic Empire Global is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  60.00  in Magic Empire Global on February 21, 2024 and sell it today you would earn a total of  12.00  from holding Magic Empire Global or generate 20.0% return on investment over 90 days.

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

Pimco Income Strategy  vs.  Magic Empire Global

Pimco Income Strategy

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 5 (%) 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.

Magic Empire Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magic Empire Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Magic Empire 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 Pimco Income and Magic Empire

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

The idea behind Pimco Income Strategy and Magic Empire Global 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 Stocks Directory module to find actively traded stocks across global markets.