Correlation Between Ford and PIMCO Access
Can any of the company-specific risk be diversified away by investing in both Ford and PIMCO Access 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 Ford and PIMCO Access into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and PIMCO Access Income, you can compare the effects of market volatilities on Ford and PIMCO Access 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 Ford with a short position of PIMCO Access. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and PIMCO Access.
Diversification Opportunities for Ford and PIMCO Access
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and PIMCO is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PIMCO Access Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Access Income and Ford 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 Ford Motor are associated (or correlated) with PIMCO Access. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Access Income has no effect on the direction of Ford i.e., Ford and PIMCO Access go up and down completely randomly.
Pair Corralation between Ford and PIMCO Access
Taking into account the 90-day investment horizon Ford is expected to generate 2.09 times less return on investment than PIMCO Access. In addition to that, Ford is 2.44 times more volatile than PIMCO Access Income. It trades about 0.01 of its total potential returns per unit of risk. PIMCO Access Income is currently generating about 0.08 per unit of volatility. If you would invest 1,225 in PIMCO Access Income on August 31, 2024 and sell it today you would earn a total of 459.00 from holding PIMCO Access Income or generate 37.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Ford Motor vs. PIMCO Access Income
Performance |
| Timeline |
| Ford Motor |
| PIMCO Access Income |
Ford and PIMCO Access Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and PIMCO Access
The main advantage of trading using opposite Ford and PIMCO Access positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, PIMCO Access 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 Access will offset losses from the drop in PIMCO Access' long position.The idea behind Ford Motor and PIMCO Access Income 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.| PIMCO Access vs. Pimco Dynamic Income | PIMCO Access vs. Pimco Corporate Income | PIMCO Access vs. Doubleline Yield Opportunities | PIMCO Access vs. Cohen Steers Reit |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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