Correlation Between Pimco All and Pimco Foreign
Can any of the company-specific risk be diversified away by investing in both Pimco All and Pimco Foreign 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 Pimco Foreign 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 Pimco Foreign Bond, you can compare the effects of market volatilities on Pimco All and Pimco Foreign 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 Pimco Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco All and Pimco Foreign.
Diversification Opportunities for Pimco All and Pimco Foreign
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and Pimco is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pimco All Asset and Pimco Foreign Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Foreign Bond 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 Pimco Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Foreign Bond has no effect on the direction of Pimco All i.e., Pimco All and Pimco Foreign go up and down completely randomly.
Pair Corralation between Pimco All and Pimco Foreign
Assuming the 90 days horizon Pimco All Asset is expected to generate 0.9 times more return on investment than Pimco Foreign. However, Pimco All Asset is 1.11 times less risky than Pimco Foreign. It trades about 0.0 of its potential returns per unit of risk. Pimco Foreign Bond is currently generating about -0.05 per unit of risk. If you would invest 661.00 in Pimco All Asset on September 2, 2024 and sell it today you would lose (1.00) from holding Pimco All Asset or give up 0.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco All Asset vs. Pimco Foreign Bond
Performance |
| Timeline |
| Pimco All Asset |
| Pimco Foreign Bond |
Pimco All and Pimco Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco All and Pimco Foreign
The main advantage of trading using opposite Pimco All and Pimco Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco All position performs unexpectedly, Pimco Foreign 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 Foreign will offset losses from the drop in Pimco Foreign'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 |
| Pimco Foreign vs. Pimco Unconstrained Bond | Pimco Foreign vs. Pimco Global Multi Asset | Pimco Foreign vs. Pimco All Asset | Pimco Foreign vs. Pimco Emerging Markets |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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