Correlation Between Ford and Pimco Total
Can any of the company-specific risk be diversified away by investing in both Ford and Pimco Total 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 Total 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 Total Return, you can compare the effects of market volatilities on Ford and Pimco Total 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 Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Pimco Total.
Diversification Opportunities for Ford and Pimco Total
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Pimco is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pimco Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Total Return 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 Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Total Return has no effect on the direction of Ford i.e., Ford and Pimco Total go up and down completely randomly.
Pair Corralation between Ford and Pimco Total
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Pimco Total. In addition to that, Ford is 6.43 times more volatile than Pimco Total Return. It trades about -0.09 of its total potential returns per unit of risk. Pimco Total Return is currently generating about 0.27 per unit of volatility. If you would invest 841.00 in Pimco Total Return on November 8, 2024 and sell it today you would earn a total of 17.00 from holding Pimco Total Return or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ford Motor vs. Pimco Total Return
Performance |
| Timeline |
| Ford Motor |
| Pimco Total Return |
Ford and Pimco Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Pimco Total
The main advantage of trading using opposite Ford and Pimco Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Pimco Total 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 Total will offset losses from the drop in Pimco Total's long position.The idea behind Ford Motor and Pimco Total Return 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 Total vs. Small Cap Value Profund | Pimco Total vs. Vanguard Small Cap Value | Pimco Total vs. Amg River Road | Pimco Total vs. Great West Loomis Sayles |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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