Correlation Between Preferred Securities and Pimco Capital
Can any of the company-specific risk be diversified away by investing in both Preferred Securities and Pimco Capital 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 Preferred Securities and Pimco Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Preferred Securities Fund and Pimco Capital Sec, you can compare the effects of market volatilities on Preferred Securities and Pimco Capital 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 Preferred Securities with a short position of Pimco Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Preferred Securities and Pimco Capital.
Diversification Opportunities for Preferred Securities and Pimco Capital
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Preferred and Pimco is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Preferred Securities Fund and Pimco Capital Sec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Capital Sec and Preferred Securities 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 Preferred Securities Fund are associated (or correlated) with Pimco Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Capital Sec has no effect on the direction of Preferred Securities i.e., Preferred Securities and Pimco Capital go up and down completely randomly.
Pair Corralation between Preferred Securities and Pimco Capital
Assuming the 90 days horizon Preferred Securities Fund is expected to under-perform the Pimco Capital. In addition to that, Preferred Securities is 1.03 times more volatile than Pimco Capital Sec. It trades about -0.12 of its total potential returns per unit of risk. Pimco Capital Sec is currently generating about 0.03 per unit of volatility. If you would invest 942.00 in Pimco Capital Sec on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Pimco Capital Sec or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Preferred Securities Fund vs. Pimco Capital Sec
Performance |
| Timeline |
| Preferred Securities |
| Pimco Capital Sec |
Preferred Securities and Pimco Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Preferred Securities and Pimco Capital
The main advantage of trading using opposite Preferred Securities and Pimco Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Preferred Securities position performs unexpectedly, Pimco Capital 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 Capital will offset losses from the drop in Pimco Capital's long position.The idea behind Preferred Securities Fund and Pimco Capital Sec 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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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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