Correlation Between American Funds and Pimco New
Can any of the company-specific risk be diversified away by investing in both American Funds and Pimco New 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 New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Washington and Pimco New York, you can compare the effects of market volatilities on American Funds and Pimco New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Pimco New.
Diversification Opportunities for American Funds and Pimco New
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Pimco is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Washington and Pimco New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco New York 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 Washington are associated (or correlated) with Pimco New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco New York has no effect on the direction of American Funds i.e., American Funds and Pimco New go up and down completely randomly.
Pair Corralation between American Funds and Pimco New
Assuming the 90 days horizon American Funds Washington is expected to generate 1.31 times more return on investment than Pimco New. However, American Funds is 1.31 times more volatile than Pimco New York. It trades about 0.07 of its potential returns per unit of risk. Pimco New York is currently generating about 0.03 per unit of risk. If you would invest 5,599 in American Funds Washington on November 9, 2024 and sell it today you would earn a total of 852.00 from holding American Funds Washington or generate 15.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Washington vs. Pimco New York
Performance |
| Timeline |
| American Funds Washington |
| Pimco New York |
American Funds and Pimco New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Pimco New
The main advantage of trading using opposite American Funds and Pimco New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Pimco New 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 New will offset losses from the drop in Pimco New's long position.| American Funds vs. Glg Intl Small | American Funds vs. Jhvit International Small | American Funds vs. Needham Small Cap | American Funds vs. Cardinal Small Cap |
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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 Stocks Directory module to find actively traded stocks across global markets.
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