Correlation Between Capital World and Pimco Foreign
Can any of the company-specific risk be diversified away by investing in both Capital World and Pimco Foreign 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 Capital World and Pimco Foreign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Bond and Pimco Foreign Bond, you can compare the effects of market volatilities on Capital World and Pimco Foreign 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 Capital World with a short position of Pimco Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Pimco Foreign.
Diversification Opportunities for Capital World and Pimco Foreign
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Capital and Pimco is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Bond and Pimco Foreign Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Foreign Bond and Capital World 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 Capital World Bond are associated (or correlated) with Pimco Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Foreign Bond has no effect on the direction of Capital World i.e., Capital World and Pimco Foreign go up and down completely randomly.
Pair Corralation between Capital World and Pimco Foreign
Assuming the 90 days horizon Capital World Bond is expected to under-perform the Pimco Foreign. In addition to that, Capital World is 1.26 times more volatile than Pimco Foreign Bond. It trades about -0.44 of its total potential returns per unit of risk. Pimco Foreign Bond is currently generating about -0.42 per unit of volatility. If you would invest 757.00 in Pimco Foreign Bond on October 9, 2024 and sell it today you would lose (21.00) from holding Pimco Foreign Bond or give up 2.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Bond vs. Pimco Foreign Bond
Performance |
| Timeline |
| Capital World Bond |
| Pimco Foreign Bond |
Capital World and Pimco Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Pimco Foreign
The main advantage of trading using opposite Capital World and Pimco Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World position performs unexpectedly, Pimco Foreign 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 Foreign will offset losses from the drop in Pimco Foreign's long position.| Capital World vs. Calvert Moderate Allocation | Capital World vs. Tiaa Cref Lifestyle Moderate | Capital World vs. Transamerica Cleartrack Retirement | Capital World vs. Moderately Aggressive Balanced |
| Pimco Foreign vs. Federated Global Allocation | Pimco Foreign vs. Harding Loevner Global | Pimco Foreign vs. Commonwealth Global Fund | Pimco Foreign vs. Ms Global Fixed |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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