Correlation Between Dodge International and Pimco Inflation

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Can any of the company-specific risk be diversified away by investing in both Dodge International and Pimco Inflation 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 Dodge International and Pimco Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge International Stock and Pimco Inflation Response, you can compare the effects of market volatilities on Dodge International and Pimco Inflation 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 Dodge International with a short position of Pimco Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge International and Pimco Inflation.

Diversification Opportunities for Dodge International and Pimco Inflation

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Dodge and Pimco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Pimco Inflation Response in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Inflation Response and Dodge International 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 Dodge International Stock are associated (or correlated) with Pimco Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Inflation Response has no effect on the direction of Dodge International i.e., Dodge International and Pimco Inflation go up and down completely randomly.

Pair Corralation between Dodge International and Pimco Inflation

Assuming the 90 days horizon Dodge International Stock is expected to under-perform the Pimco Inflation. In addition to that, Dodge International is 1.98 times more volatile than Pimco Inflation Response. It trades about -0.13 of its total potential returns per unit of risk. Pimco Inflation Response is currently generating about -0.02 per unit of volatility. If you would invest  845.00  in Pimco Inflation Response on September 13, 2024 and sell it today you would lose (3.00) from holding Pimco Inflation Response or give up 0.36% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Dodge International Stock  vs.  Pimco Inflation Response

 Performance 
       Timeline  
Dodge International Stock 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dodge International Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dodge International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Pimco Inflation Response 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Inflation Response are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Pimco Inflation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dodge International and Pimco Inflation Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dodge International and Pimco Inflation

The main advantage of trading using opposite Dodge International and Pimco Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge International position performs unexpectedly, Pimco Inflation 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 Inflation will offset losses from the drop in Pimco Inflation's long position.
The idea behind Dodge International Stock and Pimco Inflation Response pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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