Correlation Between Pimco Short and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Pimco Short and Emerging Markets 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 Short and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Short Asset and Emerging Markets Bond, you can compare the effects of market volatilities on Pimco Short and Emerging Markets 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 Short with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Short and Emerging Markets.
Diversification Opportunities for Pimco Short and Emerging Markets
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pimco and Emerging is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Short Asset and Emerging Markets Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Bond and Pimco Short 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 Short Asset are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Bond has no effect on the direction of Pimco Short i.e., Pimco Short and Emerging Markets go up and down completely randomly.
Pair Corralation between Pimco Short and Emerging Markets
Assuming the 90 days horizon Pimco Short is expected to generate 1.18 times less return on investment than Emerging Markets. But when comparing it to its historical volatility, Pimco Short Asset is 3.66 times less risky than Emerging Markets. It trades about 0.19 of its potential returns per unit of risk. Emerging Markets Bond is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 851.00 in Emerging Markets Bond on September 2, 2024 and sell it today you would earn a total of 9.00 from holding Emerging Markets Bond or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Short Asset vs. Emerging Markets Bond
Performance |
| Timeline |
| Pimco Short Asset |
| Emerging Markets Bond |
Pimco Short and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Short and Emerging Markets
The main advantage of trading using opposite Pimco Short and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Short position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Pimco Short vs. Aqr Managed Futures | Pimco Short vs. Blackrock Inflation Protected | Pimco Short vs. Western Asset Inflation | Pimco Short vs. Ab Bond Inflation |
| Emerging Markets vs. Pimco Rae Worldwide | Emerging Markets vs. Pimco Rae Worldwide | Emerging Markets vs. Pimco Rae Worldwide | Emerging Markets 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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