Correlation Between PIMCO 1-5 and Quadratic Interest

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Can any of the company-specific risk be diversified away by investing in both PIMCO 1-5 and Quadratic Interest 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 1-5 and Quadratic Interest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO 1-5 Year and Quadratic Interest Rate, you can compare the effects of market volatilities on PIMCO 1-5 and Quadratic Interest 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 1-5 with a short position of Quadratic Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO 1-5 and Quadratic Interest.

Diversification Opportunities for PIMCO 1-5 and Quadratic Interest

0.92
  Correlation Coefficient

Almost no diversification

The 12 months correlation between PIMCO and Quadratic is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO 1-5 Year and Quadratic Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quadratic Interest Rate and PIMCO 1-5 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 1-5 Year are associated (or correlated) with Quadratic Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quadratic Interest Rate has no effect on the direction of PIMCO 1-5 i.e., PIMCO 1-5 and Quadratic Interest go up and down completely randomly.

Pair Corralation between PIMCO 1-5 and Quadratic Interest

Given the investment horizon of 90 days PIMCO 1-5 Year is expected to generate 0.33 times more return on investment than Quadratic Interest. However, PIMCO 1-5 Year is 3.07 times less risky than Quadratic Interest. It trades about 0.18 of its potential returns per unit of risk. Quadratic Interest Rate is currently generating about -0.14 per unit of risk. If you would invest  4,996  in PIMCO 1-5 Year on October 30, 2022 and sell it today you would earn a total of  37.00  from holding PIMCO 1-5 Year or generate 0.74% return on investment over 90 days.
Time Period12 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

PIMCO 1-5 Year  vs.  Quadratic Interest Rate

 Performance (%) 
       Timeline  
PIMCO 1-5 Year 
PIMCO Performance
0 of 100
Over the last 90 days PIMCO 1-5 Year has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, PIMCO 1-5 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PIMCO Price Channel

Quadratic Interest Rate 
Quadratic Performance
0 of 100
Over the last 90 days Quadratic Interest Rate has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Quadratic Interest is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Quadratic Price Channel

PIMCO 1-5 and Quadratic Interest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PIMCO 1-5 and Quadratic Interest

The main advantage of trading using opposite PIMCO 1-5 and Quadratic Interest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO 1-5 position performs unexpectedly, Quadratic Interest 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 Quadratic Interest will offset losses from the drop in Quadratic Interest's long position.
PIMCO 1-5 vs. Intel
PIMCO 1-5 vs. Unified Series Trust
PIMCO 1-5 vs. FRANKLIN STRATEGIC MORTGAGE
PIMCO 1-5 vs. HUMANA INC
The idea behind PIMCO 1-5 Year and Quadratic Interest Rate 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.
Quadratic Interest vs. Intel
Quadratic Interest vs. Unified Series Trust
Quadratic Interest vs. FRANKLIN STRATEGIC MORTGAGE
Quadratic Interest vs. HUMANA INC
Check out your portfolio center. 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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