Correlation Between All Asset and Pimco Small
Can any of the company-specific risk be diversified away by investing in both All Asset and Pimco Small 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 All Asset and Pimco Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between All Asset Fund and Pimco Small Cap, you can compare the effects of market volatilities on All Asset and Pimco Small 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 All Asset with a short position of Pimco Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of All Asset and Pimco Small.
Diversification Opportunities for All Asset and Pimco Small
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between All and Pimco is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding All Asset Fund and Pimco Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Small Cap and All Asset 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 All Asset Fund are associated (or correlated) with Pimco Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Small Cap has no effect on the direction of All Asset i.e., All Asset and Pimco Small go up and down completely randomly.
Pair Corralation between All Asset and Pimco Small
Assuming the 90 days horizon All Asset is expected to generate 7.8 times less return on investment than Pimco Small. But when comparing it to its historical volatility, All Asset Fund is 4.06 times less risky than Pimco Small. It trades about 0.13 of its potential returns per unit of risk. Pimco Small Cap is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 756.00 in Pimco Small Cap on August 27, 2024 and sell it today you would earn a total of 70.00 from holding Pimco Small Cap or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
All Asset Fund vs. Pimco Small Cap
Performance |
| Timeline |
| All Asset Fund |
| Pimco Small Cap |
All Asset and Pimco Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with All Asset and Pimco Small
The main advantage of trading using opposite All Asset and Pimco Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All Asset position performs unexpectedly, Pimco Small 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 Small will offset losses from the drop in Pimco Small's long position.| All Asset vs. Hennessy Technology Fund | All Asset vs. Vanguard Information Technology | All Asset vs. Pgim Jennison Technology | All Asset vs. Firsthand Technology Opportunities |
| Pimco Small vs. Neuberger Berman Real | Pimco Small vs. Goldman Sachs Balanced | Pimco Small vs. Fundamental Indexplus Tr | Pimco Small vs. Pimco International Stocksplus |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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