Correlation Between Pimco Capital and Financial Industries
Can any of the company-specific risk be diversified away by investing in both Pimco Capital and Financial Industries 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 Capital and Financial Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Capital Sec and Financial Industries Fund, you can compare the effects of market volatilities on Pimco Capital and Financial Industries 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 Capital with a short position of Financial Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Capital and Financial Industries.
Diversification Opportunities for Pimco Capital and Financial Industries
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pimco and Financial is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Capital Sec and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries and Pimco Capital 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 Capital Sec are associated (or correlated) with Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Pimco Capital i.e., Pimco Capital and Financial Industries go up and down completely randomly.
Pair Corralation between Pimco Capital and Financial Industries
Assuming the 90 days horizon Pimco Capital is expected to generate 22.13 times less return on investment than Financial Industries. But when comparing it to its historical volatility, Pimco Capital Sec is 13.74 times less risky than Financial Industries. It trades about 0.19 of its potential returns per unit of risk. Financial Industries Fund is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,897 in Financial Industries Fund on September 2, 2024 and sell it today you would earn a total of 231.00 from holding Financial Industries Fund or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Capital Sec vs. Financial Industries Fund
Performance |
| Timeline |
| Pimco Capital Sec |
| Financial Industries |
Pimco Capital and Financial Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Capital and Financial Industries
The main advantage of trading using opposite Pimco Capital and Financial Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Capital position performs unexpectedly, Financial Industries 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 Financial Industries will offset losses from the drop in Financial Industries' long position.| Pimco Capital vs. Nuveen Preferred Securities | Pimco Capital vs. Cohen Steers Preferd | Pimco Capital vs. Pimco Income Fund | Pimco Capital vs. Pimco Floating 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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