Correlation Between Ford and Pimco Mortgage
Can any of the company-specific risk be diversified away by investing in both Ford and Pimco Mortgage 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 Mortgage 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 Mortgage Opportunities, you can compare the effects of market volatilities on Ford and Pimco Mortgage 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 Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Pimco Mortgage.
Diversification Opportunities for Ford and Pimco Mortgage
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Pimco is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pimco Mortgage Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Mortgage Oppor 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 Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Mortgage Oppor has no effect on the direction of Ford i.e., Ford and Pimco Mortgage go up and down completely randomly.
Pair Corralation between Ford and Pimco Mortgage
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Pimco Mortgage. In addition to that, Ford is 8.38 times more volatile than Pimco Mortgage Opportunities. It trades about 0.0 of its total potential returns per unit of risk. Pimco Mortgage Opportunities is currently generating about 0.1 per unit of volatility. If you would invest 847.00 in Pimco Mortgage Opportunities on August 31, 2024 and sell it today you would earn a total of 83.00 from holding Pimco Mortgage Opportunities or generate 9.8% 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 Mortgage Opportunities
Performance |
| Timeline |
| Ford Motor |
| Pimco Mortgage Oppor |
Ford and Pimco Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Pimco Mortgage
The main advantage of trading using opposite Ford and Pimco Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Pimco Mortgage 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 Mortgage will offset losses from the drop in Pimco Mortgage's long position.The idea behind Ford Motor and Pimco Mortgage Opportunities 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 Mortgage vs. Jpmorgan Strategic Income | Pimco Mortgage vs. HUMANA INC | Pimco Mortgage vs. Aquagold International | Pimco Mortgage vs. Thrivent High Yield |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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