Correlation Between Dow Jones and Pimco International
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Pimco International 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 International 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 International Stocksplus, you can compare the effects of market volatilities on Dow Jones and Pimco International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Pimco International.
Diversification Opportunities for Dow Jones and Pimco International
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Pimco is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Pimco International Stocksplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco International has no effect on the direction of Dow Jones i.e., Dow Jones and Pimco International go up and down completely randomly.
Pair Corralation between Dow Jones and Pimco International
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.06 times less return on investment than Pimco International. But when comparing it to its historical volatility, Dow Jones Industrial is 1.02 times less risky than Pimco International. It trades about 0.09 of its potential returns per unit of risk. Pimco International Stocksplus is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 659.00 in Pimco International Stocksplus on November 21, 2024 and sell it today you would earn a total of 247.00 from holding Pimco International Stocksplus or generate 37.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. Pimco International Stocksplus
Performance |
| Timeline |
Dow Jones and Pimco International Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pimco International Stocksplus
Pair trading matchups for Pimco International
Pair Trading with Dow Jones and Pimco International
The main advantage of trading using opposite Dow Jones and Pimco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Pimco International 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 International will offset losses from the drop in Pimco International's long position.| Dow Jones vs. Boston Beer | Dow Jones vs. Tianjin Capital Environmental | Dow Jones vs. Compania Cervecerias Unidas | Dow Jones vs. Monster Beverage Corp |
| Pimco International vs. Pimco Small Cap | Pimco International vs. Fundamental Indexplus Tr | Pimco International vs. Stocksplus Total Return | Pimco International vs. Allianzgi Nfj Mid Cap |
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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