Correlation Between Federated Prudent and Pimco Stocksplus
Can any of the company-specific risk be diversified away by investing in both Federated Prudent and Pimco Stocksplus 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 Federated Prudent and Pimco Stocksplus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Prudent Bear and Pimco Stocksplus Ar, you can compare the effects of market volatilities on Federated Prudent and Pimco Stocksplus 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 Federated Prudent with a short position of Pimco Stocksplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Prudent and Pimco Stocksplus.
Diversification Opportunities for Federated Prudent and Pimco Stocksplus
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Federated and Pimco is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Federated Prudent Bear and Pimco Stocksplus Ar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Stocksplus and Federated Prudent 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 Federated Prudent Bear are associated (or correlated) with Pimco Stocksplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Stocksplus has no effect on the direction of Federated Prudent i.e., Federated Prudent and Pimco Stocksplus go up and down completely randomly.
Pair Corralation between Federated Prudent and Pimco Stocksplus
Assuming the 90 days horizon Federated Prudent Bear is expected to under-perform the Pimco Stocksplus. In addition to that, Federated Prudent is 1.44 times more volatile than Pimco Stocksplus Ar. It trades about -0.05 of its total potential returns per unit of risk. Pimco Stocksplus Ar is currently generating about -0.06 per unit of volatility. If you would invest 795.00 in Pimco Stocksplus Ar on September 2, 2024 and sell it today you would lose (187.00) from holding Pimco Stocksplus Ar or give up 23.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Prudent Bear vs. Pimco Stocksplus Ar
Performance |
| Timeline |
| Federated Prudent Bear |
| Pimco Stocksplus |
Federated Prudent and Pimco Stocksplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Prudent and Pimco Stocksplus
The main advantage of trading using opposite Federated Prudent and Pimco Stocksplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Prudent position performs unexpectedly, Pimco Stocksplus 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 Stocksplus will offset losses from the drop in Pimco Stocksplus' long position.| Federated Prudent vs. Siit High Yield | Federated Prudent vs. Federated Institutional High | Federated Prudent vs. Needham Aggressive Growth | Federated Prudent vs. Pioneer High Yield |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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