Correlation Between Pimco Corporate and MainStay CBRE

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

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

Diversification Opportunities for Pimco Corporate and MainStay CBRE

0.6

Correlation Coefficient

Pimco Corporate  MainStay CBRE

Poor diversification

The 3 months correlation between Pimco and MainStay is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Corporate Income and MainStay CBRE Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MainStay CBRE Global and Pimco Corporate 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 Corporate Income are associated (or correlated) with MainStay CBRE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MainStay CBRE Global has no effect on the direction of Pimco Corporate i.e., Pimco Corporate and MainStay CBRE go up and down completely randomly.

Pair Corralation between Pimco Corporate and MainStay CBRE

Considering the 90-day investment horizon Pimco Corporate Income is expected to generate 0.63 times more return on investment than MainStay CBRE. However, Pimco Corporate Income is 1.58 times less risky than MainStay CBRE. It trades about 0.16 of its potential returns per unit of risk. MainStay CBRE Global is currently generating about 0.05 per unit of risk. If you would invest  1,226  in Pimco Corporate Income on August 18, 2024 and sell it today you would earn a total of  164.00  from holding Pimco Corporate Income or generate 13.38% return on investment over 90 days.

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

Pimco Corporate Income  vs.  MainStay CBRE Global

Pimco Corporate Income

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Corporate Income are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak fundamental indicators, Pimco Corporate may actually be approaching a critical reversion point that can send shares even higher in December 2024.

MainStay CBRE Global

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MainStay CBRE Global are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, MainStay CBRE is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Pimco Corporate and MainStay CBRE

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

The idea behind Pimco Corporate Income and MainStay CBRE 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.