Correlation Between Metropolitan West and Pimco Mortgage
Can any of the company-specific risk be diversified away by investing in both Metropolitan West and Pimco Mortgage 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 Metropolitan West and Pimco Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West High and Pimco Mortgage Opportunities, you can compare the effects of market volatilities on Metropolitan West and Pimco Mortgage 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 Metropolitan West with a short position of Pimco Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Pimco Mortgage.
Diversification Opportunities for Metropolitan West and Pimco Mortgage
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Metropolitan and Pimco is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West High and Pimco Mortgage Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Mortgage Oppor and Metropolitan West 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 Metropolitan West High are associated (or correlated) with Pimco Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Mortgage Oppor has no effect on the direction of Metropolitan West i.e., Metropolitan West and Pimco Mortgage go up and down completely randomly.
Pair Corralation between Metropolitan West and Pimco Mortgage
Assuming the 90 days horizon Metropolitan West High is expected to generate 0.78 times more return on investment than Pimco Mortgage. However, Metropolitan West High is 1.28 times less risky than Pimco Mortgage. It trades about 0.21 of its potential returns per unit of risk. Pimco Mortgage Opportunities is currently generating about 0.09 per unit of risk. If you would invest 896.00 in Metropolitan West High on September 2, 2024 and sell it today you would earn a total of 41.00 from holding Metropolitan West High or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West High vs. Pimco Mortgage Opportunities
Performance |
| Timeline |
| Metropolitan West High |
| Pimco Mortgage Oppor |
Metropolitan West and Pimco Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Pimco Mortgage
The main advantage of trading using opposite Metropolitan West and Pimco Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Pimco Mortgage 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 Mortgage will offset losses from the drop in Pimco Mortgage's long position.| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
| Pimco Mortgage vs. Dreyfusstandish Global Fixed | Pimco Mortgage vs. Commonwealth Global Fund | Pimco Mortgage vs. Rbc Global Opportunities | Pimco Mortgage vs. Wisdomtree Siegel Global |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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