Correlation Between Small Cap and Pimco Short
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Pimco Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value and Pimco Short Asset, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Pimco Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Pimco Short.
Diversification Opportunities for Small Cap and Pimco Short
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SMALL and Pimco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value 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 Small Cap 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 Small Cap Value 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 Small Cap i.e., Small Cap and Pimco Short go up and down completely randomly.
Pair Corralation between Small Cap and Pimco Short
If you would invest 1,108 in Small Cap Value on September 5, 2024 and sell it today you would earn a total of 107.00 from holding Small Cap Value or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Small Cap Value vs. Pimco Short Asset
Performance |
| Timeline |
| Small Cap Value |
| Pimco Short Asset |
Small Cap and Pimco Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Pimco Short
The main advantage of trading using opposite Small Cap and Pimco Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. T Rowe Price | Small Cap vs. Legg Mason Partners | Small Cap vs. Jp Morgan Smartretirement | Small Cap vs. T Rowe Price |
| Pimco Short vs. Short Term Fund A | Pimco Short vs. Pimco Senior Floating | Pimco Short vs. Pimco Floating Income | Pimco Short vs. Diversified Income 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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