Correlation Between Gmo High and Pimco Preferred
Can any of the company-specific risk be diversified away by investing in both Gmo High and Pimco Preferred 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 Gmo High and Pimco Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Pimco Preferred And, you can compare the effects of market volatilities on Gmo High and Pimco Preferred 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 Gmo High with a short position of Pimco Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Pimco Preferred.
Diversification Opportunities for Gmo High and Pimco Preferred
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gmo and Pimco is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Pimco Preferred And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Preferred And and Gmo High 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 Gmo High Yield are associated (or correlated) with Pimco Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Preferred And has no effect on the direction of Gmo High i.e., Gmo High and Pimco Preferred go up and down completely randomly.
Pair Corralation between Gmo High and Pimco Preferred
Assuming the 90 days horizon Gmo High Yield is expected to generate 1.08 times more return on investment than Pimco Preferred. However, Gmo High is 1.08 times more volatile than Pimco Preferred And. It trades about 0.25 of its potential returns per unit of risk. Pimco Preferred And is currently generating about 0.14 per unit of risk. If you would invest 1,670 in Gmo High Yield on November 3, 2024 and sell it today you would earn a total of 18.00 from holding Gmo High Yield or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Pimco Preferred And
Performance |
| Timeline |
| Gmo High Yield |
| Pimco Preferred And |
Gmo High and Pimco Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Pimco Preferred
The main advantage of trading using opposite Gmo High and Pimco Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Pimco Preferred 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 Preferred will offset losses from the drop in Pimco Preferred's long position.| Gmo High vs. Baird Quality Intermediate | Gmo High vs. Gamco Global Telecommunications | Gmo High vs. Nuveen Strategic Municipal | Gmo High vs. Legg Mason Partners |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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