Correlation Between Dow Jones and PIMCO 15
Can any of the company-specific risk be diversified away by investing in both Dow Jones and PIMCO 15 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 Dow Jones and PIMCO 15 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and PIMCO 15 Year, you can compare the effects of market volatilities on Dow Jones and PIMCO 15 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 Dow Jones with a short position of PIMCO 15. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and PIMCO 15.
Diversification Opportunities for Dow Jones and PIMCO 15
Excellent diversification
The 3 months correlation between Dow and PIMCO is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and PIMCO 15 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO 15 Year and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with PIMCO 15. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO 15 Year has no effect on the direction of Dow Jones i.e., Dow Jones and PIMCO 15 go up and down completely randomly.
Pair Corralation between Dow Jones and PIMCO 15
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.2 times more return on investment than PIMCO 15. However, Dow Jones is 1.2 times more volatile than PIMCO 15 Year. It trades about 0.15 of its potential returns per unit of risk. PIMCO 15 Year is currently generating about -0.1 per unit of risk. If you would invest 4,251,495 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 135,540 from holding Dow Jones Industrial or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. PIMCO 15 Year
Performance |
| Timeline |
Dow Jones and PIMCO 15 Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
PIMCO 15 Year
Pair trading matchups for PIMCO 15
Pair Trading with Dow Jones and PIMCO 15
The main advantage of trading using opposite Dow Jones and PIMCO 15 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, PIMCO 15 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 15 will offset losses from the drop in PIMCO 15's long position.| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
| PIMCO 15 vs. VanEck JP Morgan | PIMCO 15 vs. Vanguard Extended Duration | PIMCO 15 vs. PIMCO 1 5 Year | PIMCO 15 vs. PIMCO Broad TIPS |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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