Correlation Between Pimco All and State Farm
Can any of the company-specific risk be diversified away by investing in both Pimco All and State Farm 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 All and State Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco All Asset and State Farm International, you can compare the effects of market volatilities on Pimco All and State Farm 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 All with a short position of State Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco All and State Farm.
Diversification Opportunities for Pimco All and State Farm
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PIMCO and State is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pimco All Asset and State Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Farm International and Pimco All 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 All Asset are associated (or correlated) with State Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Farm International has no effect on the direction of Pimco All i.e., Pimco All and State Farm go up and down completely randomly.
Pair Corralation between Pimco All and State Farm
Assuming the 90 days horizon Pimco All Asset is expected to generate 1.42 times more return on investment than State Farm. However, Pimco All is 1.42 times more volatile than State Farm International. It trades about 0.12 of its potential returns per unit of risk. State Farm International is currently generating about 0.05 per unit of risk. If you would invest 1,122 in Pimco All Asset on August 29, 2024 and sell it today you would earn a total of 13.00 from holding Pimco All Asset or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco All Asset vs. State Farm International
Performance |
| Timeline |
| Pimco All Asset |
| State Farm International |
Pimco All and State Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco All and State Farm
The main advantage of trading using opposite Pimco All and State Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco All position performs unexpectedly, State Farm 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 State Farm will offset losses from the drop in State Farm's long position.| Pimco All vs. Mirova Global Green | Pimco All vs. Ab Select Longshort | Pimco All vs. Versatile Bond Portfolio | Pimco All vs. Vanguard Emerging Markets |
| State Farm vs. Angel Oak Ultrashort | State Farm vs. Barings Active Short | State Farm vs. Federated Short Intermediate Duration | State Farm vs. Blrc Sgy Mnp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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