Correlation Between Dow Jones and Pimco Fundamental
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Pimco Fundamental 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 Fundamental 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 Fundamental Advantage, you can compare the effects of market volatilities on Dow Jones and Pimco Fundamental 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 Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Pimco Fundamental.
Diversification Opportunities for Dow Jones and Pimco Fundamental
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Pimco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Pimco Fundamental Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Fundamental 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 Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Fundamental has no effect on the direction of Dow Jones i.e., Dow Jones and Pimco Fundamental go up and down completely randomly.
Pair Corralation between Dow Jones and Pimco Fundamental
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Pimco Fundamental. In addition to that, Dow Jones is 1.09 times more volatile than Pimco Fundamental Advantage. It trades about -0.19 of its total potential returns per unit of risk. Pimco Fundamental Advantage is currently generating about 0.13 per unit of volatility. If you would invest 761.00 in Pimco Fundamental Advantage on November 28, 2024 and sell it today you would earn a total of 12.00 from holding Pimco Fundamental Advantage or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Pimco Fundamental Advantage
Performance |
| Timeline |
Dow Jones and Pimco Fundamental Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pimco Fundamental Advantage
Pair trading matchups for Pimco Fundamental
Pair Trading with Dow Jones and Pimco Fundamental
The main advantage of trading using opposite Dow Jones and Pimco Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Pimco Fundamental 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 Fundamental will offset losses from the drop in Pimco Fundamental's long position.| Dow Jones vs. Gladstone Investment | Dow Jones vs. BW Offshore Limited | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. Aperture Health |
| Pimco Fundamental vs. Schwab Treasury Inflation | Pimco Fundamental vs. Ab Bond Inflation | Pimco Fundamental vs. Short Duration Inflation | Pimco Fundamental vs. Simt Multi Asset Inflation |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |