Correlation Between Pimco Dynamic and Cornerstone Strategic

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

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

Diversification Opportunities for Pimco Dynamic and Cornerstone Strategic

0.86

Correlation Coefficient

Pimco Dynamic  Cornerstone Strategic

Very poor diversification

The 3 months correlation between Pimco and Cornerstone is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Dynamic Income and Cornerstone Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic and Pimco Dynamic 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 Dynamic Income are associated (or correlated) with Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of Pimco Dynamic i.e., Pimco Dynamic and Cornerstone Strategic go up and down completely randomly.

Pair Corralation between Pimco Dynamic and Cornerstone Strategic

Considering the 90-day investment horizon Pimco Dynamic Income is expected to under-perform the Cornerstone Strategic. But the fund apears to be less risky and, when comparing its historical volatility, Pimco Dynamic Income is 2.07 times less risky than Cornerstone Strategic. The fund trades about -0.09 of its potential returns per unit of risk. The Cornerstone Strategic Value is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  744.00  in Cornerstone Strategic Value on January 31, 2024 and sell it today you would lose (7.00) from holding Cornerstone Strategic Value or give up 0.94% of portfolio value over 90 days.

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

Pimco Dynamic Income  vs.  Cornerstone Strategic Value

Pimco Dynamic Me

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong fundamental indicators, Pimco Dynamic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Cornerstone Strategic

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cornerstone Strategic Value are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unsteady essential indicators, Cornerstone Strategic may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Pimco Dynamic and Cornerstone Strategic

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

The idea behind Pimco Dynamic Income and Cornerstone Strategic Value 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.