Correlation Between World Energy and Pimco Energy
Can any of the company-specific risk be diversified away by investing in both World Energy and Pimco Energy 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 World Energy and Pimco Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and Pimco Energy Tactical, you can compare the effects of market volatilities on World Energy and Pimco Energy 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 World Energy with a short position of Pimco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Pimco Energy.
Diversification Opportunities for World Energy and Pimco Energy
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between World and Pimco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Pimco Energy Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Energy Tactical and World Energy 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 World Energy Fund are associated (or correlated) with Pimco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Energy Tactical has no effect on the direction of World Energy i.e., World Energy and Pimco Energy go up and down completely randomly.
Pair Corralation between World Energy and Pimco Energy
Assuming the 90 days horizon World Energy Fund is expected to generate 0.65 times more return on investment than Pimco Energy. However, World Energy Fund is 1.54 times less risky than Pimco Energy. It trades about 0.03 of its potential returns per unit of risk. Pimco Energy Tactical is currently generating about -0.05 per unit of risk. If you would invest 1,500 in World Energy Fund on October 12, 2024 and sell it today you would earn a total of 9.00 from holding World Energy Fund or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Pimco Energy Tactical
Performance |
| Timeline |
| World Energy |
| Pimco Energy Tactical |
World Energy and Pimco Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Pimco Energy
The main advantage of trading using opposite World Energy and Pimco Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Pimco Energy 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 Energy will offset losses from the drop in Pimco Energy's long position.| World Energy vs. Angel Oak Financial | World Energy vs. Blackrock Financial Institutions | World Energy vs. 1919 Financial Services | World Energy vs. Putnam Global Financials |
| Pimco Energy vs. Nasdaq 100 Profund Nasdaq 100 | Pimco Energy vs. Alternative Asset Allocation | Pimco Energy vs. Issachar Fund Class | Pimco Energy vs. Rbb Fund |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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