Correlation Between PIMCO Investment and Generation Mining

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

By analyzing existing cross correlation between PIMCO Investment Grade and Generation Mining, you can compare the effects of market volatilities on PIMCO Investment and Generation Mining 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 Investment with a short position of Generation Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Investment and Generation Mining.

Diversification Opportunities for PIMCO Investment and Generation Mining

-0.74

Correlation Coefficient

PIMCO Investment  Generation Mining

Pay attention - limited upside

The 3 months correlation between PIMCO and Generation is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Investment Grade and Generation Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generation Mining and PIMCO Investment 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 Investment Grade are associated (or correlated) with Generation Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generation Mining has no effect on the direction of PIMCO Investment i.e., PIMCO Investment and Generation Mining go up and down completely randomly.

Pair Corralation between PIMCO Investment and Generation Mining

Assuming the 90 days trading horizon PIMCO Investment Grade is expected to generate 0.12 times more return on investment than Generation Mining. However, PIMCO Investment Grade is 8.58 times less risky than Generation Mining. It trades about 0.25 of its potential returns per unit of risk. Generation Mining is currently generating about -0.2 per unit of risk. If you would invest  1,669  in PIMCO Investment Grade on June 14, 2024 and sell it today you would earn a total of  34.00  from holding PIMCO Investment Grade or generate 2.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

PIMCO Investment Grade  vs.  Generation Mining

PIMCO Investment Grade

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Investment Grade are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, PIMCO Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Generation Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generation Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with PIMCO Investment and Generation Mining

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

The idea behind PIMCO Investment Grade and Generation Mining 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.