Correlation Between PIMCO Dollar and PIMCO Short

Can any of the company-specific risk be diversified away by investing in both PIMCO Dollar 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 Dollar 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 Dollar Short and PIMCO Short Term High, you can compare the effects of market volatilities on PIMCO Dollar 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 Dollar with a short position of PIMCO Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Dollar and PIMCO Short.

Diversification Opportunities for PIMCO Dollar and PIMCO Short

-0.15

Correlation Coefficient

PIMCO Dollar  PIMCO Short

Good diversification

The 3 months correlation between PIMCO and PIMCO is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Dollar Short 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 Dollar 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 Dollar Short 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 Dollar i.e., PIMCO Dollar and PIMCO Short go up and down completely randomly.

Pair Corralation between PIMCO Dollar and PIMCO Short

Assuming the 90 days trading horizon PIMCO Dollar Short is expected to generate 0.37 times more return on investment than PIMCO Short. However, PIMCO Dollar Short is 2.71 times less risky than PIMCO Short. It trades about 0.15 of its potential returns per unit of risk. PIMCO Short Term High is currently generating about 0.02 per unit of risk. If you would invest  9,959  in PIMCO Dollar Short on February 3, 2024 and sell it today you would earn a total of  40.00  from holding PIMCO Dollar Short or generate 0.4% return on investment over 90 days.

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

PIMCO Dollar Short  vs.  PIMCO Short Term High

PIMCO Dollar Short

Risk-Adjusted Performance

0 of 100

Very Weak

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

PIMCO Short Term

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Short Term High are ranked lower than 2 (%) 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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with PIMCO Dollar and PIMCO Short

The main advantage of trading using opposite PIMCO Dollar and PIMCO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Dollar 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 Dollar Short 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.