Correlation Between Main Street and Pimco Dynamic
Can any of the company-specific risk be diversified away by investing in both Main Street and Pimco Dynamic 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 Main Street and Pimco Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Capital and Pimco Dynamic Income, you can compare the effects of market volatilities on Main Street and Pimco Dynamic 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 Main Street with a short position of Pimco Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Pimco Dynamic.
Diversification Opportunities for Main Street and Pimco Dynamic
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Main and Pimco is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and Pimco Dynamic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Dynamic Income and Main Street 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 Main Street Capital are associated (or correlated) with Pimco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Dynamic Income has no effect on the direction of Main Street i.e., Main Street and Pimco Dynamic go up and down completely randomly.
Pair Corralation between Main Street and Pimco Dynamic
Given the investment horizon of 90 days Main Street Capital is expected to generate 1.39 times more return on investment than Pimco Dynamic. However, Main Street is 1.39 times more volatile than Pimco Dynamic Income. It trades about 0.14 of its potential returns per unit of risk. Pimco Dynamic Income is currently generating about 0.07 per unit of risk. If you would invest 4,730 in Main Street Capital on September 2, 2024 and sell it today you would earn a total of 817.00 from holding Main Street Capital or generate 17.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Capital vs. Pimco Dynamic Income
Performance |
| Timeline |
| Main Street Capital |
| Pimco Dynamic Income |
Main Street and Pimco Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and Pimco Dynamic
The main advantage of trading using opposite Main Street and Pimco Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, Pimco Dynamic 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 Dynamic will offset losses from the drop in Pimco Dynamic's long position.| Main Street vs. Gladstone Capital | Main Street vs. PennantPark Floating Rate | Main Street vs. Horizon Technology Finance | Main Street vs. Prospect Capital |
| Pimco Dynamic vs. Pimco Corporate Income | Pimco Dynamic vs. Guggenheim Strategic Opportunities | Pimco Dynamic vs. Pimco Dynamic Income | Pimco Dynamic vs. Pimco High Income |
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 the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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