Correlation Between Ford and PIMCO Short
Can any of the company-specific risk be diversified away by investing in both Ford and PIMCO Short 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 Short 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 Short Term High, you can compare the effects of market volatilities on Ford and PIMCO Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and PIMCO Short.
Diversification Opportunities for Ford and PIMCO Short
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and PIMCO is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PIMCO Short Term High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Short Term 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Short Term has no effect on the direction of Ford i.e., Ford and PIMCO Short go up and down completely randomly.
Pair Corralation between Ford and PIMCO Short
Taking into account the 90-day investment horizon Ford is expected to generate 1.21 times less return on investment than PIMCO Short. But when comparing it to its historical volatility, Ford Motor is 1.35 times less risky than PIMCO Short. It trades about 0.02 of its potential returns per unit of risk. PIMCO Short Term High is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 7,377 in PIMCO Short Term High on September 13, 2024 and sell it today you would earn a total of 151.00 from holding PIMCO Short Term High or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.31% |
| Values | Daily Returns |
Ford Motor vs. PIMCO Short Term High
Performance |
| Timeline |
| Ford Motor |
| PIMCO Short Term |
Ford and PIMCO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and PIMCO Short
The main advantage of trading using opposite Ford and PIMCO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, PIMCO Short 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 Short will offset losses from the drop in PIMCO Short's long position.The idea behind Ford Motor and PIMCO Short Term High 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 Short vs. Baloise Holding AG | PIMCO Short vs. 21Shares Polkadot ETP | PIMCO Short vs. UBS ETF MSCI | PIMCO Short vs. BB Biotech AG |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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