Correlation Between PIMCO Low and PIMCO Dollar
Can any of the company-specific risk be diversified away by investing in both PIMCO Low and PIMCO Dollar 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 PIMCO Low and PIMCO Dollar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO Low Duration and PIMCO Dollar Short, you can compare the effects of market volatilities on PIMCO Low and PIMCO Dollar 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 PIMCO Low with a short position of PIMCO Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Low and PIMCO Dollar.
Diversification Opportunities for PIMCO Low and PIMCO Dollar
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PIMCO and PIMCO is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Low Duration and PIMCO Dollar Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Dollar Short and PIMCO Low 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 PIMCO Low Duration are associated (or correlated) with PIMCO Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Dollar Short has no effect on the direction of PIMCO Low i.e., PIMCO Low and PIMCO Dollar go up and down completely randomly.
Pair Corralation between PIMCO Low and PIMCO Dollar
Assuming the 90 days trading horizon PIMCO Low Duration is expected to generate 4.38 times more return on investment than PIMCO Dollar. However, PIMCO Low is 4.38 times more volatile than PIMCO Dollar Short. It trades about 0.16 of its potential returns per unit of risk. PIMCO Dollar Short is currently generating about 0.48 per unit of risk. If you would invest 9,969 in PIMCO Low Duration on October 23, 2024 and sell it today you would earn a total of 54.00 from holding PIMCO Low Duration or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO Low Duration vs. PIMCO Dollar Short
Performance |
| Timeline |
| PIMCO Low Duration |
| PIMCO Dollar Short |
PIMCO Low and PIMCO Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Low and PIMCO Dollar
The main advantage of trading using opposite PIMCO Low and PIMCO Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Low position performs unexpectedly, PIMCO Dollar 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 Dollar will offset losses from the drop in PIMCO Dollar's long position.| PIMCO Low vs. PIMCO Dollar Short | PIMCO Low vs. PIMCO ETFs plc | PIMCO Low vs. PIMCO Short Term High | PIMCO Low vs. PIMCO Emerging Markets |
| PIMCO Dollar vs. PIMCO Low Duration | PIMCO Dollar vs. PIMCO ETFs plc | PIMCO Dollar vs. PIMCO Short Term High | PIMCO Dollar vs. PIMCO Emerging Markets |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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