Correlation Between TD Canadian and PIMCO Managed

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

By analyzing existing cross correlation between TD Canadian Long and PIMCO Managed Core, you can compare the effects of market volatilities on TD Canadian and PIMCO 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 TD Canadian with a short position of PIMCO Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of TD Canadian and PIMCO Managed.

Diversification Opportunities for TD Canadian and PIMCO Managed

-0.48

Correlation Coefficient

TD Canadian  PIMCO Managed

Very good diversification

The 3 months correlation between TCLB and PIMCO is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding TD Canadian Long and PIMCO Managed Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Managed Core and TD Canadian 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 TD Canadian Long are associated (or correlated) with PIMCO Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Managed Core has no effect on the direction of TD Canadian i.e., TD Canadian and PIMCO Managed go up and down completely randomly.

Pair Corralation between TD Canadian and PIMCO Managed

Assuming the 90 days trading horizon TD Canadian Long is expected to under-perform the PIMCO Managed. In addition to that, TD Canadian is 1.66 times more volatile than PIMCO Managed Core. It trades about -0.08 of its total potential returns per unit of risk. PIMCO Managed Core is currently generating about 0.08 per unit of volatility. If you would invest  1,771  in PIMCO Managed Core on April 21, 2025 and sell it today you would earn a total of  36.00  from holding PIMCO Managed Core or generate 2.03% return on investment over 90 days.

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

TD Canadian Long  vs.  PIMCO Managed Core

TD Canadian Long

Risk-Adjusted Performance

Very Weak

Over the last 90 days TD Canadian Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, TD Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

PIMCO Managed Core

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Managed Core are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, PIMCO Managed is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with TD Canadian and PIMCO Managed

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

The idea behind TD Canadian Long and PIMCO Managed Core 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.