Correlation Between Icon Natural and Pimco Total
Can any of the company-specific risk be diversified away by investing in both Icon Natural and Pimco Total 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 Icon Natural and Pimco Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icon Natural Resources and Pimco Total Return, you can compare the effects of market volatilities on Icon Natural and Pimco Total 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 Icon Natural with a short position of Pimco Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Natural and Pimco Total.
Diversification Opportunities for Icon Natural and Pimco Total
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Icon and Pimco is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Pimco Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Total Return and Icon Natural 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 Icon Natural Resources are associated (or correlated) with Pimco Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Total Return has no effect on the direction of Icon Natural i.e., Icon Natural and Pimco Total go up and down completely randomly.
Pair Corralation between Icon Natural and Pimco Total
Assuming the 90 days horizon Icon Natural is expected to generate 1.37 times less return on investment than Pimco Total. In addition to that, Icon Natural is 3.91 times more volatile than Pimco Total Return. It trades about 0.02 of its total potential returns per unit of risk. Pimco Total Return is currently generating about 0.1 per unit of volatility. If you would invest 824.00 in Pimco Total Return on September 3, 2024 and sell it today you would earn a total of 39.00 from holding Pimco Total Return or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Icon Natural Resources vs. Pimco Total Return
Performance |
| Timeline |
| Icon Natural Resources |
| Pimco Total Return |
Icon Natural and Pimco Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icon Natural and Pimco Total
The main advantage of trading using opposite Icon Natural and Pimco Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural position performs unexpectedly, Pimco Total 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 Total will offset losses from the drop in Pimco Total's long position.| Icon Natural vs. Icon Financial Fund | Icon Natural vs. Dreyfus Natural Resources | Icon Natural vs. Icon Natural Resources | Icon Natural vs. Icon Information Technology |
| Pimco Total vs. Multisector Bond Sma | Pimco Total vs. California Bond Fund | Pimco Total vs. Ab Bond Inflation | Pimco Total vs. Versatile Bond Portfolio |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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