Correlation Between BB Biotech and PIMCO Short
Can any of the company-specific risk be diversified away by investing in both BB Biotech 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 BB Biotech and PIMCO Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BB Biotech AG and PIMCO Short Term High, you can compare the effects of market volatilities on BB Biotech 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 BB Biotech with a short position of PIMCO Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Biotech and PIMCO Short.
Diversification Opportunities for BB Biotech and PIMCO Short
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BION and PIMCO is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding BB Biotech AG and PIMCO Short Term High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Short Term and BB Biotech 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 BB Biotech AG 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 Term has no effect on the direction of BB Biotech i.e., BB Biotech and PIMCO Short go up and down completely randomly.
Pair Corralation between BB Biotech and PIMCO Short
Assuming the 90 days trading horizon BB Biotech AG is expected to under-perform the PIMCO Short. But the stock apears to be less risky and, when comparing its historical volatility, BB Biotech AG is 1.77 times less risky than PIMCO Short. The stock trades about -0.04 of its potential returns per unit of risk. The PIMCO Short Term High is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9,000 in PIMCO Short Term High on September 14, 2024 and sell it today you would earn a total of 528.00 from holding PIMCO Short Term High or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 71.98% |
| Values | Daily Returns |
BB Biotech AG vs. PIMCO Short Term High
Performance |
| Timeline |
| BB Biotech AG |
| PIMCO Short Term |
BB Biotech and PIMCO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BB Biotech and PIMCO Short
The main advantage of trading using opposite BB Biotech and PIMCO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Biotech 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.| BB Biotech vs. Swiss Life Holding | BB Biotech vs. Swiss Re AG | BB Biotech vs. Helvetia Holding AG | BB Biotech vs. Partners Group Holding |
| PIMCO Short vs. Baloise Holding AG | PIMCO Short vs. 21Shares Polkadot ETP | PIMCO Short vs. UBS ETF MSCI | PIMCO Short vs. BB Biotech AG |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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