Correlation Between NYSE Composite and Pimco Senior
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Pimco Senior 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 NYSE Composite and Pimco Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Pimco Senior Floating, you can compare the effects of market volatilities on NYSE Composite and Pimco Senior 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 NYSE Composite with a short position of Pimco Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Pimco Senior.
Diversification Opportunities for NYSE Composite and Pimco Senior
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Pimco is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Pimco Senior Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Senior Floating and NYSE Composite 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 NYSE Composite are associated (or correlated) with Pimco Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Senior Floating has no effect on the direction of NYSE Composite i.e., NYSE Composite and Pimco Senior go up and down completely randomly.
Pair Corralation between NYSE Composite and Pimco Senior
Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.05 times more return on investment than Pimco Senior. However, NYSE Composite is 4.05 times more volatile than Pimco Senior Floating. It trades about 0.1 of its potential returns per unit of risk. Pimco Senior Floating is currently generating about 0.22 per unit of risk. If you would invest 1,679,840 in NYSE Composite on September 14, 2024 and sell it today you would earn a total of 297,069 from holding NYSE Composite or generate 17.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Pimco Senior Floating
Performance |
| Timeline |
NYSE Composite and Pimco Senior Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Pimco Senior Floating
Pair trading matchups for Pimco Senior
Pair Trading with NYSE Composite and Pimco Senior
The main advantage of trading using opposite NYSE Composite and Pimco Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Pimco Senior 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 Senior will offset losses from the drop in Pimco Senior's long position.| NYSE Composite vs. Air Products and | NYSE Composite vs. Allient | NYSE Composite vs. Ecovyst | NYSE Composite vs. CTS Corporation |
| Pimco Senior vs. Pimco Rae Worldwide | Pimco Senior vs. Pimco Rae Worldwide | Pimco Senior vs. Pimco Rae Worldwide | Pimco Senior vs. Pimco Rae Worldwide |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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