Correlation Between Ford and Pimco Emerging
Can any of the company-specific risk be diversified away by investing in both Ford and Pimco Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Ford and Pimco Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Pimco Emerging.
Diversification Opportunities for Ford and Pimco Emerging
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Pimco is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pimco Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Emerging Markets has no effect on the direction of Ford i.e., Ford and Pimco Emerging go up and down completely randomly.
Pair Corralation between Ford and Pimco Emerging
Taking into account the 90-day investment horizon Ford Motor is expected to generate 6.98 times more return on investment than Pimco Emerging. However, Ford is 6.98 times more volatile than Pimco Emerging Markets. It trades about 0.05 of its potential returns per unit of risk. Pimco Emerging Markets is currently generating about -0.13 per unit of risk. If you would invest 1,092 in Ford Motor on August 26, 2024 and sell it today you would earn a total of 26.00 from holding Ford Motor or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Pimco Emerging Markets
Performance |
| Timeline |
| Ford Motor |
| Pimco Emerging Markets |
Ford and Pimco Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Pimco Emerging
The main advantage of trading using opposite Ford and Pimco Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Pimco Emerging 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 Emerging will offset losses from the drop in Pimco Emerging's long position.The idea behind Ford Motor and Pimco Emerging Markets 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 Emerging vs. Pimco Rae Worldwide | Pimco Emerging vs. Pimco Rae Worldwide | Pimco Emerging vs. Pimco Rae Worldwide | Pimco Emerging vs. Pimco Rae Worldwide |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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