Correlation Between Pimco Capital and Pimco Extended
Can any of the company-specific risk be diversified away by investing in both Pimco Capital and Pimco Extended 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 Pimco Extended 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 Pimco Extended Duration, you can compare the effects of market volatilities on Pimco Capital and Pimco Extended 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 Pimco Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Capital and Pimco Extended.
Diversification Opportunities for Pimco Capital and Pimco Extended
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pimco and Pimco is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Capital Sec and Pimco Extended Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Extended Duration 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 Pimco Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Extended Duration has no effect on the direction of Pimco Capital i.e., Pimco Capital and Pimco Extended go up and down completely randomly.
Pair Corralation between Pimco Capital and Pimco Extended
Assuming the 90 days horizon Pimco Capital is expected to generate 2.56 times less return on investment than Pimco Extended. But when comparing it to its historical volatility, Pimco Capital Sec is 9.88 times less risky than Pimco Extended. It trades about 0.53 of its potential returns per unit of risk. Pimco Extended Duration is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,281 in Pimco Extended Duration on November 27, 2024 and sell it today you would earn a total of 41.00 from holding Pimco Extended Duration or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Capital Sec vs. Pimco Extended Duration
Performance |
| Timeline |
| Pimco Capital Sec |
| Pimco Extended Duration |
Pimco Capital and Pimco Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Capital and Pimco Extended
The main advantage of trading using opposite Pimco Capital and Pimco Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Capital position performs unexpectedly, Pimco Extended 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 Extended will offset losses from the drop in Pimco Extended's 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 |
| Pimco Extended vs. Vanguard Extended Duration | Pimco Extended vs. Pimco Long Term Credit | Pimco Extended vs. Pimco Extended Duration | Pimco Extended vs. Pimco Long Term Credit |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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