Correlation Between Pimco Trends and Guidepath(r) Managed

Can any of the company-specific risk be diversified away by investing in both Pimco Trends and Guidepath(r) Managed 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 Trends and Guidepath(r) Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pimco Trends Managed and Guidepath Managed Futures, you can compare the effects of market volatilities on Pimco Trends and Guidepath(r) Managed 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 Trends with a short position of Guidepath(r) Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Trends and Guidepath(r) Managed.

Diversification Opportunities for Pimco Trends and Guidepath(r) Managed

0.47

Correlation Coefficient

Pimco Trends  Guidepath(r) Managed

Very weak diversification

The 3 months correlation between Pimco and Guidepath(r) is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Trends Managed and Guidepath Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidepath Managed Futures and Pimco Trends 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 Trends Managed are associated (or correlated) with Guidepath(r) Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidepath Managed Futures has no effect on the direction of Pimco Trends i.e., Pimco Trends and Guidepath(r) Managed go up and down completely randomly.

Pair Corralation between Pimco Trends and Guidepath(r) Managed

Assuming the 90 days horizon Pimco Trends Managed is expected to under-perform the Guidepath(r) Managed. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Trends Managed is 1.01 times less risky than Guidepath(r) Managed. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Guidepath Managed Futures is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  904.00  in Guidepath Managed Futures on February 29, 2024 and sell it today you would earn a total of  11.00  from holding Guidepath Managed Futures or generate 1.22% return on investment over 90 days.

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

Pimco Trends Managed  vs.  Guidepath Managed Futures

Pimco Trends Managed

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Trends Managed are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Trends is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guidepath Managed Futures

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guidepath Managed Futures are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Guidepath(r) Managed may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Pimco Trends and Guidepath(r) Managed

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

The idea behind Pimco Trends Managed and Guidepath Managed Futures 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.