Correlation Between American Funds and Pimco Commoditiesplus
Can any of the company-specific risk be diversified away by investing in both American Funds and Pimco Commoditiesplus 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 American Funds and Pimco Commoditiesplus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Conservative and Pimco Moditiesplus Strategy, you can compare the effects of market volatilities on American Funds and Pimco Commoditiesplus 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 American Funds with a short position of Pimco Commoditiesplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Pimco Commoditiesplus.
Diversification Opportunities for American Funds and Pimco Commoditiesplus
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Pimco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Conservative and Pimco Moditiesplus Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Commoditiesplus and American Funds 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 American Funds Conservative are associated (or correlated) with Pimco Commoditiesplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Commoditiesplus has no effect on the direction of American Funds i.e., American Funds and Pimco Commoditiesplus go up and down completely randomly.
Pair Corralation between American Funds and Pimco Commoditiesplus
Assuming the 90 days horizon American Funds Conservative is expected to generate 0.36 times more return on investment than Pimco Commoditiesplus. However, American Funds Conservative is 2.77 times less risky than Pimco Commoditiesplus. It trades about 0.17 of its potential returns per unit of risk. Pimco Moditiesplus Strategy is currently generating about -0.01 per unit of risk. If you would invest 1,272 in American Funds Conservative on September 1, 2024 and sell it today you would earn a total of 99.00 from holding American Funds Conservative or generate 7.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
American Funds Conservative vs. Pimco Moditiesplus Strategy
Performance |
| Timeline |
| American Funds Conse |
| Pimco Commoditiesplus |
American Funds and Pimco Commoditiesplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Pimco Commoditiesplus
The main advantage of trading using opposite American Funds and Pimco Commoditiesplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Pimco Commoditiesplus 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 Commoditiesplus will offset losses from the drop in Pimco Commoditiesplus' long position.| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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