Correlation Between Applied Finance and Pimco Capital
Can any of the company-specific risk be diversified away by investing in both Applied Finance 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 Applied Finance and Pimco Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Pimco Capital Sec, you can compare the effects of market volatilities on Applied Finance 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 Applied Finance with a short position of Pimco Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Pimco Capital.
Diversification Opportunities for Applied Finance and Pimco Capital
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Applied and Pimco is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer 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 Applied Finance 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 Applied Finance Explorer 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 Applied Finance i.e., Applied Finance and Pimco Capital go up and down completely randomly.
Pair Corralation between Applied Finance and Pimco Capital
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 5.88 times more return on investment than Pimco Capital. However, Applied Finance is 5.88 times more volatile than Pimco Capital Sec. It trades about 0.2 of its potential returns per unit of risk. Pimco Capital Sec is currently generating about 0.16 per unit of risk. If you would invest 2,178 in Applied Finance Explorer on November 7, 2024 and sell it today you would earn a total of 105.00 from holding Applied Finance Explorer or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Pimco Capital Sec
Performance |
| Timeline |
| Applied Finance Explorer |
| Pimco Capital Sec |
Applied Finance and Pimco Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Pimco Capital
The main advantage of trading using opposite Applied Finance and Pimco Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance 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.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Pimco Capital vs. Pimco Rae Worldwide | Pimco Capital vs. Pimco Realestaterealreturn Strategy | Pimco Capital vs. Pimco Rae Worldwide | Pimco Capital vs. Pimco Rae Worldwide |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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