Correlation Between Pimco Rae and Pimco Short

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

Diversification Opportunities for Pimco Rae and Pimco Short

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Pimco and Pimco is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Worldwide and Pimco Short Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Short Asset and Pimco Rae 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 Rae Worldwide 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 Asset has no effect on the direction of Pimco Rae i.e., Pimco Rae and Pimco Short go up and down completely randomly.

Pair Corralation between Pimco Rae and Pimco Short

Assuming the 90 days horizon Pimco Rae is expected to generate 1.06 times less return on investment than Pimco Short. In addition to that, Pimco Rae is 4.96 times more volatile than Pimco Short Asset. It trades about 0.04 of its total potential returns per unit of risk. Pimco Short Asset is currently generating about 0.2 per unit of volatility. If you would invest  911.00  in Pimco Short Asset on January 15, 2024 and sell it today you would earn a total of  83.00  from holding Pimco Short Asset or generate 9.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Pimco Rae Worldwide  vs.  Pimco Short Asset

 Performance 
       Timeline  
Pimco Rae Worldwide 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Rae Worldwide are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Pimco Rae is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Pimco Short Asset 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Short Asset are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pimco Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Rae and Pimco Short Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pimco Rae and Pimco Short

The main advantage of trading using opposite Pimco Rae and Pimco Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Rae 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 Rae Worldwide and Pimco Short Asset 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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