Correlation Between World Energy and Pimco Trends
Can any of the company-specific risk be diversified away by investing in both World Energy and Pimco Trends 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 Trends 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 Trends Managed, you can compare the effects of market volatilities on World Energy and Pimco Trends 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 Trends. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Pimco Trends.
Diversification Opportunities for World Energy and Pimco Trends
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WORLD and PIMCO is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Pimco Trends Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Trends Managed 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 Trends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Trends Managed has no effect on the direction of World Energy i.e., World Energy and Pimco Trends go up and down completely randomly.
Pair Corralation between World Energy and Pimco Trends
Assuming the 90 days horizon World Energy Fund is expected to generate 2.26 times more return on investment than Pimco Trends. However, World Energy is 2.26 times more volatile than Pimco Trends Managed. It trades about 0.04 of its potential returns per unit of risk. Pimco Trends Managed is currently generating about -0.02 per unit of risk. If you would invest 1,217 in World Energy Fund on November 27, 2024 and sell it today you would earn a total of 239.00 from holding World Energy Fund or generate 19.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Pimco Trends Managed
Performance |
| Timeline |
| World Energy |
| Pimco Trends Managed |
World Energy and Pimco Trends Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Pimco Trends
The main advantage of trading using opposite World Energy and Pimco Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Pimco Trends 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 Trends will offset losses from the drop in Pimco Trends' long position.| World Energy vs. T Rowe Price | World Energy vs. Allianzgi Small Cap Blend | World Energy vs. Fidelity Small Cap | World Energy vs. T Rowe Price |
| Pimco Trends vs. Multisector Bond Sma | Pimco Trends vs. Versatile Bond Portfolio | Pimco Trends vs. Morningstar Defensive Bond | Pimco Trends vs. Goldman Sachs Bond |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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