Correlation Between Dow Jones and Pimco Emerging
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Pimco Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Dow Jones and Pimco Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Pimco Emerging.
Diversification Opportunities for Dow Jones and Pimco Emerging
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Pimco is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Pimco Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Emerging Markets has no effect on the direction of Dow Jones i.e., Dow Jones and Pimco Emerging go up and down completely randomly.
Pair Corralation between Dow Jones and Pimco Emerging
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 2.4 times more return on investment than Pimco Emerging. However, Dow Jones is 2.4 times more volatile than Pimco Emerging Markets. It trades about 0.26 of its potential returns per unit of risk. Pimco Emerging Markets is currently generating about -0.1 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% 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 Emerging Markets
Performance |
| Timeline |
Dow Jones and Pimco Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pimco Emerging Markets
Pair trading matchups for Pimco Emerging
Pair Trading with Dow Jones and Pimco Emerging
The main advantage of trading using opposite Dow Jones and Pimco Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Pimco Emerging 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 Emerging will offset losses from the drop in Pimco Emerging's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Pimco Emerging vs. Lord Abbett Small | Pimco Emerging vs. Great West Loomis Sayles | Pimco Emerging vs. Mid Cap Growth Profund | Pimco Emerging vs. Mid Cap Value Profund |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |