Correlation Between Financial Industries and Pimco Capital
Can any of the company-specific risk be diversified away by investing in both Financial Industries and Pimco Capital 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 Financial Industries and Pimco Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Industries Fund and Pimco Capital Sec, you can compare the effects of market volatilities on Financial Industries and Pimco Capital 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 Financial Industries with a short position of Pimco Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Pimco Capital.
Diversification Opportunities for Financial Industries and Pimco Capital
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Financial and Pimco is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Pimco Capital Sec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Capital Sec and Financial Industries 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 Financial Industries Fund are associated (or correlated) with Pimco Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Capital Sec has no effect on the direction of Financial Industries i.e., Financial Industries and Pimco Capital go up and down completely randomly.
Pair Corralation between Financial Industries and Pimco Capital
Assuming the 90 days horizon Financial Industries Fund is expected to generate 13.89 times more return on investment than Pimco Capital. However, Financial Industries is 13.89 times more volatile than Pimco Capital Sec. It trades about 0.31 of its potential returns per unit of risk. Pimco Capital Sec is currently generating about 0.16 per unit of risk. If you would invest 1,885 in Financial Industries Fund on September 3, 2024 and sell it today you would earn a total of 225.00 from holding Financial Industries Fund or generate 11.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Industries Fund vs. Pimco Capital Sec
Performance |
| Timeline |
| Financial Industries |
| Pimco Capital Sec |
Financial Industries and Pimco Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Pimco Capital
The main advantage of trading using opposite Financial Industries and Pimco Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries position performs unexpectedly, Pimco Capital 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 Capital will offset losses from the drop in Pimco Capital's long position.| Financial Industries vs. Qs Growth Fund | Financial Industries vs. Smallcap Growth Fund | Financial Industries vs. Eip Growth And | Financial Industries vs. Pace Large Growth |
| Pimco Capital vs. Nuveen Preferred Securities | Pimco Capital vs. Cohen Steers Preferd | Pimco Capital vs. Pimco Income Fund | Pimco Capital vs. Pimco Floating Income |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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