Correlation Between PIMCO Low and PIMCO Short

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

By analyzing existing cross correlation between PIMCO Low Duration and PIMCO Short Term High, you can compare the effects of market volatilities on PIMCO Low and PIMCO Short 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 Low with a short position of PIMCO Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Low and PIMCO Short.

Diversification Opportunities for PIMCO Low and PIMCO Short

0.35

Correlation Coefficient

PIMCO Low  PIMCO Short

Weak diversification

The 3 months correlation between PIMCO and PIMCO is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Low Duration and PIMCO Short Term High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Short Term and PIMCO Low 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 Low Duration are associated (or correlated) with PIMCO Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Short Term has no effect on the direction of PIMCO Low i.e., PIMCO Low and PIMCO Short go up and down completely randomly.

Pair Corralation between PIMCO Low and PIMCO Short

Assuming the 90 days trading horizon PIMCO Low Duration is expected to under-perform the PIMCO Short. But the etf apears to be less risky and, when comparing its historical volatility, PIMCO Low Duration is 2.95 times less risky than PIMCO Short. The etf trades about -0.16 of its potential returns per unit of risk. The PIMCO Short Term High is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,384  in PIMCO Short Term High on February 6, 2024 and sell it today you would earn a total of  44.00  from holding PIMCO Short Term High or generate 0.6% return on investment over 90 days.

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

PIMCO Low Duration  vs.  PIMCO Short Term High

PIMCO Low Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PIMCO Low Duration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, PIMCO Low is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

PIMCO Short Term

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Short Term High are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, PIMCO Short is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with PIMCO Low and PIMCO Short

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

The idea behind PIMCO Low Duration and PIMCO Short Term High 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.