Correlation Between PIMCO Euro and Vanguard USD
Can any of the company-specific risk be diversified away by investing in both PIMCO Euro and Vanguard USD 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 Euro and Vanguard USD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO Euro Short Term and Vanguard USD Treasury, you can compare the effects of market volatilities on PIMCO Euro and Vanguard USD 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 Euro with a short position of Vanguard USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Euro and Vanguard USD.
Diversification Opportunities for PIMCO Euro and Vanguard USD
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PIMCO and Vanguard is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Euro Short Term and Vanguard USD Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard USD Treasury and PIMCO Euro 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 Euro Short Term are associated (or correlated) with Vanguard USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard USD Treasury has no effect on the direction of PIMCO Euro i.e., PIMCO Euro and Vanguard USD go up and down completely randomly.
Pair Corralation between PIMCO Euro and Vanguard USD
Assuming the 90 days trading horizon PIMCO Euro Short Term is expected to generate 0.24 times more return on investment than Vanguard USD. However, PIMCO Euro Short Term is 4.16 times less risky than Vanguard USD. It trades about 0.12 of its potential returns per unit of risk. Vanguard USD Treasury is currently generating about 0.02 per unit of risk. If you would invest 1,163 in PIMCO Euro Short Term on November 2, 2024 and sell it today you would earn a total of 3.00 from holding PIMCO Euro Short Term or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO Euro Short Term vs. Vanguard USD Treasury
Performance |
| Timeline |
| PIMCO Euro Short |
| Vanguard USD Treasury |
PIMCO Euro and Vanguard USD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Euro and Vanguard USD
The main advantage of trading using opposite PIMCO Euro and Vanguard USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Euro position performs unexpectedly, Vanguard USD 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 Vanguard USD will offset losses from the drop in Vanguard USD's long position.| PIMCO Euro vs. PIMCO Short Term High | PIMCO Euro vs. PIMCO Short Term High | PIMCO Euro vs. PIMCO Euro Short | PIMCO Euro vs. PIMCO Low Duration |
| Vanguard USD vs. Vanguard FTSE Emerging | Vanguard USD vs. Vanguard USD Emerging | Vanguard USD vs. Vanguard FTSE Developed | Vanguard USD vs. Vanguard FTSE Japan |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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