Correlation Between PIMCO Emerging and PIMCO Dollar
Can any of the company-specific risk be diversified away by investing in both PIMCO Emerging and PIMCO Dollar 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 PIMCO Emerging and PIMCO Dollar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO Emerging Markets and PIMCO Dollar Short, you can compare the effects of market volatilities on PIMCO Emerging and PIMCO Dollar 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 PIMCO Emerging with a short position of PIMCO Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Emerging and PIMCO Dollar.
Diversification Opportunities for PIMCO Emerging and PIMCO Dollar
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PIMCO and PIMCO is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Emerging Markets and PIMCO Dollar Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Dollar Short and PIMCO Emerging 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 PIMCO Emerging Markets are associated (or correlated) with PIMCO Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Dollar Short has no effect on the direction of PIMCO Emerging i.e., PIMCO Emerging and PIMCO Dollar go up and down completely randomly.
Pair Corralation between PIMCO Emerging and PIMCO Dollar
Assuming the 90 days trading horizon PIMCO Emerging is expected to generate 8.12 times less return on investment than PIMCO Dollar. In addition to that, PIMCO Emerging is 12.68 times more volatile than PIMCO Dollar Short. It trades about 0.01 of its total potential returns per unit of risk. PIMCO Dollar Short is currently generating about 0.62 per unit of volatility. If you would invest 10,787 in PIMCO Dollar Short on November 3, 2024 and sell it today you would earn a total of 280.00 from holding PIMCO Dollar Short or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO Emerging Markets vs. PIMCO Dollar Short
Performance |
| Timeline |
| PIMCO Emerging Markets |
| PIMCO Dollar Short |
PIMCO Emerging and PIMCO Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Emerging and PIMCO Dollar
The main advantage of trading using opposite PIMCO Emerging and PIMCO Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Emerging position performs unexpectedly, PIMCO Dollar 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 Dollar will offset losses from the drop in PIMCO Dollar's long position.| PIMCO Emerging vs. PIMCO Dollar Short | PIMCO Emerging vs. PIMCO Low Duration | PIMCO Emerging vs. PIMCO ETFs plc | PIMCO Emerging vs. PIMCO Short Term High |
| PIMCO Dollar vs. PIMCO Low Duration | PIMCO Dollar vs. PIMCO ETFs plc | PIMCO Dollar vs. PIMCO Short Term High | PIMCO Dollar vs. PIMCO Emerging Markets |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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