Correlation Between Pimco All and Absolute Capital
Can any of the company-specific risk be diversified away by investing in both Pimco All and Absolute Capital 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 Absolute Capital 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 Absolute Capital Defender, you can compare the effects of market volatilities on Pimco All and Absolute Capital 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 Absolute Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco All and Absolute Capital.
Diversification Opportunities for Pimco All and Absolute Capital
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between PIMCO and Absolute is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Pimco All Asset and Absolute Capital Defender in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Capital Defender 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 Absolute Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Capital Defender has no effect on the direction of Pimco All i.e., Pimco All and Absolute Capital go up and down completely randomly.
Pair Corralation between Pimco All and Absolute Capital
Assuming the 90 days horizon Pimco All is expected to generate 1.74 times less return on investment than Absolute Capital. But when comparing it to its historical volatility, Pimco All Asset is 1.23 times less risky than Absolute Capital. It trades about 0.1 of its potential returns per unit of risk. Absolute Capital Defender is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,019 in Absolute Capital Defender on September 2, 2024 and sell it today you would earn a total of 173.00 from holding Absolute Capital Defender or generate 16.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco All Asset vs. Absolute Capital Defender
Performance |
| Timeline |
| Pimco All Asset |
| Absolute Capital Defender |
Pimco All and Absolute Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco All and Absolute Capital
The main advantage of trading using opposite Pimco All and Absolute Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco All position performs unexpectedly, Absolute Capital 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 Absolute Capital will offset losses from the drop in Absolute Capital's long position.| Pimco All vs. Pimco Rae Worldwide | Pimco All vs. Pimco Rae Worldwide | Pimco All vs. Pimco Rae Worldwide | Pimco All vs. Pimco Rae Worldwide |
| Absolute Capital vs. Versatile Bond Portfolio | Absolute Capital vs. Maryland Tax Free Bond | Absolute Capital vs. Inflation Protected Bond Fund | Absolute Capital 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |