Correlation Between PIMCO Low and PIMCO Sterling
Can any of the company-specific risk be diversified away by investing in both PIMCO Low and PIMCO Sterling 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 Sterling 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 Sterling Short, you can compare the effects of market volatilities on PIMCO Low and PIMCO Sterling 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 Sterling. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Low and PIMCO Sterling.
Diversification Opportunities for PIMCO Low and PIMCO Sterling
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PIMCO and PIMCO is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Low Duration and PIMCO Sterling Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Sterling 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 Sterling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Sterling Short has no effect on the direction of PIMCO Low i.e., PIMCO Low and PIMCO Sterling go up and down completely randomly.
Pair Corralation between PIMCO Low and PIMCO Sterling
Assuming the 90 days trading horizon PIMCO Low Duration is expected to generate 6.07 times more return on investment than PIMCO Sterling. However, PIMCO Low is 6.07 times more volatile than PIMCO Sterling Short. It trades about 0.18 of its potential returns per unit of risk. PIMCO Sterling Short is currently generating about 0.5 per unit of risk. If you would invest 10,026 in PIMCO Low Duration on September 2, 2024 and sell it today you would earn a total of 83.00 from holding PIMCO Low Duration or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO Low Duration vs. PIMCO Sterling Short
Performance |
| Timeline |
| PIMCO Low Duration |
| PIMCO Sterling Short |
PIMCO Low and PIMCO Sterling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Low and PIMCO Sterling
The main advantage of trading using opposite PIMCO Low and PIMCO Sterling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Low position performs unexpectedly, PIMCO Sterling 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 Sterling will offset losses from the drop in PIMCO Sterling's long position.| PIMCO Low vs. GraniteShares 3x Short | PIMCO Low vs. WisdomTree Natural Gas | PIMCO Low vs. Leverage Shares 3x | PIMCO Low vs. WisdomTree Natural Gas |
| PIMCO Sterling vs. PIMCO Dollar Short | PIMCO Sterling vs. PIMCO Low Duration | PIMCO Sterling vs. PIMCO ETFs plc | PIMCO Sterling vs. PIMCO Short Term High |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |