Correlation Between Pimco All and Power Momentum
Can any of the company-specific risk be diversified away by investing in both Pimco All and Power Momentum 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 Power Momentum 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 Power Momentum Index, you can compare the effects of market volatilities on Pimco All and Power Momentum 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 Power Momentum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco All and Power Momentum.
Diversification Opportunities for Pimco All and Power Momentum
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pimco and Power is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Pimco All Asset and Power Momentum Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Momentum Index 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 Power Momentum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Momentum Index has no effect on the direction of Pimco All i.e., Pimco All and Power Momentum go up and down completely randomly.
Pair Corralation between Pimco All and Power Momentum
Assuming the 90 days horizon Pimco All is expected to generate 3.93 times less return on investment than Power Momentum. But when comparing it to its historical volatility, Pimco All Asset is 2.14 times less risky than Power Momentum. It trades about 0.18 of its potential returns per unit of risk. Power Momentum Index is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,410 in Power Momentum Index on September 2, 2024 and sell it today you would earn a total of 96.00 from holding Power Momentum Index or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco All Asset vs. Power Momentum Index
Performance |
| Timeline |
| Pimco All Asset |
| Power Momentum Index |
Pimco All and Power Momentum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco All and Power Momentum
The main advantage of trading using opposite Pimco All and Power Momentum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco All position performs unexpectedly, Power Momentum 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 Power Momentum will offset losses from the drop in Power Momentum's long position.| Pimco All vs. Columbia Small Cap | Pimco All vs. Vanguard Small Cap Value | Pimco All vs. Fidelity Small Cap | Pimco All vs. Heartland Value Plus |
| Power Momentum vs. Omni Small Cap Value | Power Momentum vs. Bbh Partner Fund | Power Momentum vs. Eic Value Fund | Power Momentum vs. Commonwealth Global Fund |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |