Correlation Between Federated Government and Pimco Short-term
Can any of the company-specific risk be diversified away by investing in both Federated Government and Pimco Short-term 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 Federated Government and Pimco Short-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Government Ultrashort and Pimco Short Term Fund, you can compare the effects of market volatilities on Federated Government and Pimco Short-term 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 Federated Government with a short position of Pimco Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Government and Pimco Short-term.
Diversification Opportunities for Federated Government and Pimco Short-term
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FEDERATED and Pimco is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Federated Government Ultrashor and Pimco Short Term Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Short Term and Federated Government 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 Federated Government Ultrashort are associated (or correlated) with Pimco Short-term. 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 Federated Government i.e., Federated Government and Pimco Short-term go up and down completely randomly.
Pair Corralation between Federated Government and Pimco Short-term
Assuming the 90 days horizon Federated Government is expected to generate 1.17 times less return on investment than Pimco Short-term. In addition to that, Federated Government is 1.14 times more volatile than Pimco Short Term Fund. It trades about 0.19 of its total potential returns per unit of risk. Pimco Short Term Fund is currently generating about 0.26 per unit of volatility. If you would invest 953.00 in Pimco Short Term Fund on October 26, 2024 and sell it today you would earn a total of 15.00 from holding Pimco Short Term Fund or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Government Ultrashor vs. Pimco Short Term Fund
Performance |
| Timeline |
| Federated Government |
| Pimco Short Term |
Federated Government and Pimco Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Government and Pimco Short-term
The main advantage of trading using opposite Federated Government and Pimco Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Government position performs unexpectedly, Pimco Short-term 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-term will offset losses from the drop in Pimco Short-term's long position.| Federated Government vs. Federated Emerging Market | Federated Government vs. Federated Mdt All | Federated Government vs. Federated Mdt Balanced | Federated Government vs. Federated Global Allocation |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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