Correlation Between Ford and Pimco High
Can any of the company-specific risk be diversified away by investing in both Ford and Pimco High 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 High 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 High Yield, you can compare the effects of market volatilities on Ford and Pimco High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Pimco High.
Diversification Opportunities for Ford and Pimco High
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Pimco is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pimco High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco High Yield 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco High Yield has no effect on the direction of Ford i.e., Ford and Pimco High go up and down completely randomly.
Pair Corralation between Ford and Pimco High
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Pimco High. In addition to that, Ford is 7.95 times more volatile than Pimco High Yield. It trades about 0.0 of its total potential returns per unit of risk. Pimco High Yield is currently generating about 0.1 per unit of volatility. If you would invest 776.00 in Pimco High Yield on August 31, 2024 and sell it today you would earn a total of 87.00 from holding Pimco High Yield or generate 11.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Ford Motor vs. Pimco High Yield
Performance |
| Timeline |
| Ford Motor |
| Pimco High Yield |
Ford and Pimco High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Pimco High
The main advantage of trading using opposite Ford and Pimco High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Pimco High 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 High will offset losses from the drop in Pimco High's long position.The idea behind Ford Motor and Pimco High Yield 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 High vs. Nuveen High Yield | Pimco High vs. Nuveen High Yield | Pimco High vs. Nuveen High Yield | Pimco High vs. Nuveen 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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