Correlation Between World Energy and Pimco Short
Can any of the company-specific risk be diversified away by investing in both World Energy and Pimco Short 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 Short 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 Short Asset, you can compare the effects of market volatilities on World Energy and Pimco Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Pimco Short.
Diversification Opportunities for World Energy and Pimco Short
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between World and Pimco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Pimco Short Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Short Asset 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Short Asset has no effect on the direction of World Energy i.e., World Energy and Pimco Short go up and down completely randomly.
Pair Corralation between World Energy and Pimco Short
Assuming the 90 days horizon World Energy Fund is expected to generate 12.47 times more return on investment than Pimco Short. However, World Energy is 12.47 times more volatile than Pimco Short Asset. It trades about 0.05 of its potential returns per unit of risk. Pimco Short Asset is currently generating about 0.23 per unit of risk. If you would invest 1,289 in World Energy Fund on September 15, 2024 and sell it today you would earn a total of 188.00 from holding World Energy Fund or generate 14.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Pimco Short Asset
Performance |
| Timeline |
| World Energy |
| Pimco Short Asset |
World Energy and Pimco Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Pimco Short
The main advantage of trading using opposite World Energy and Pimco Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Pimco Short 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 Short will offset losses from the drop in Pimco Short's long position.| World Energy vs. Jennison Natural Resources | World Energy vs. Icon Natural Resources | World Energy vs. Tortoise Energy Independence | World Energy vs. Clearbridge Energy Mlp |
| Pimco Short vs. Pimco Rae Worldwide | Pimco Short vs. Pimco Rae Worldwide | Pimco Short vs. Pimco Rae Worldwide | Pimco Short 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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