Correlation Between Pimco Funds and Small Cap
Can any of the company-specific risk be diversified away by investing in both Pimco Funds and Small Cap 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 Funds and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Funds and Small Cap Core, you can compare the effects of market volatilities on Pimco Funds and Small Cap 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 Funds with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Funds and Small Cap.
Diversification Opportunities for Pimco Funds and Small Cap
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PIMCO and Small is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Funds and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core and Pimco Funds 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 Funds are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of Pimco Funds i.e., Pimco Funds and Small Cap go up and down completely randomly.
Pair Corralation between Pimco Funds and Small Cap
If you would invest 1,377 in Small Cap Core on September 2, 2024 and sell it today you would earn a total of 125.00 from holding Small Cap Core or generate 9.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Funds vs. Small Cap Core
Performance |
| Timeline |
| Pimco Funds |
| Small Cap Core |
Pimco Funds and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Funds and Small Cap
The main advantage of trading using opposite Pimco Funds and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Funds position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Pimco Funds vs. Vanguard Total Stock | Pimco Funds vs. Vanguard 500 Index | Pimco Funds vs. Vanguard Total Stock | Pimco Funds vs. Vanguard Total Stock |
| Small Cap vs. Ab Global E | Small Cap vs. Ab Global E | Small Cap vs. Ab Global E | Small Cap vs. Ab Minnesota Portfolio |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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