Correlation Between Pimco Funds and American Beacon
Can any of the company-specific risk be diversified away by investing in both Pimco Funds and American Beacon 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 American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Funds and American Beacon Twentyfour, you can compare the effects of market volatilities on Pimco Funds and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Funds and American Beacon.
Diversification Opportunities for Pimco Funds and American Beacon
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PIMCO and American is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Funds and American Beacon Twentyfour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Twen 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Twen has no effect on the direction of Pimco Funds i.e., Pimco Funds and American Beacon go up and down completely randomly.
Pair Corralation between Pimco Funds and American Beacon
Assuming the 90 days horizon Pimco Funds is expected to generate 3.34 times more return on investment than American Beacon. However, Pimco Funds is 3.34 times more volatile than American Beacon Twentyfour. It trades about 0.13 of its potential returns per unit of risk. American Beacon Twentyfour is currently generating about 0.29 per unit of risk. If you would invest 91.00 in Pimco Funds on September 2, 2024 and sell it today you would earn a total of 9.00 from holding Pimco Funds or generate 9.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Funds vs. American Beacon Twentyfour
Performance |
| Timeline |
| Pimco Funds |
| American Beacon Twen |
Pimco Funds and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Funds and American Beacon
The main advantage of trading using opposite Pimco Funds and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Funds position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon'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 |
| American Beacon vs. American Century Etf | American Beacon vs. Applied Finance Explorer | American Beacon vs. Mutual Of America | American Beacon vs. Queens Road Small |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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