Correlation Between Pimco Small and Fundamental Indexplus
Can any of the company-specific risk be diversified away by investing in both Pimco Small and Fundamental Indexplus 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 Small and Fundamental Indexplus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Small Cap and Fundamental Indexplus Tr, you can compare the effects of market volatilities on Pimco Small and Fundamental Indexplus 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 Small with a short position of Fundamental Indexplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Small and Fundamental Indexplus.
Diversification Opportunities for Pimco Small and Fundamental Indexplus
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Fundamental is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Small Cap and Fundamental Indexplus Tr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Indexplus and Pimco Small 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 Small Cap are associated (or correlated) with Fundamental Indexplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Indexplus has no effect on the direction of Pimco Small i.e., Pimco Small and Fundamental Indexplus go up and down completely randomly.
Pair Corralation between Pimco Small and Fundamental Indexplus
Assuming the 90 days horizon Pimco Small Cap is expected to generate 1.65 times more return on investment than Fundamental Indexplus. However, Pimco Small is 1.65 times more volatile than Fundamental Indexplus Tr. It trades about 0.13 of its potential returns per unit of risk. Fundamental Indexplus Tr is currently generating about 0.0 per unit of risk. If you would invest 753.00 in Pimco Small Cap on August 25, 2024 and sell it today you would earn a total of 60.00 from holding Pimco Small Cap or generate 7.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Small Cap vs. Fundamental Indexplus Tr
Performance |
| Timeline |
| Pimco Small Cap |
| Fundamental Indexplus |
Pimco Small and Fundamental Indexplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Small and Fundamental Indexplus
The main advantage of trading using opposite Pimco Small and Fundamental Indexplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Small position performs unexpectedly, Fundamental Indexplus 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 Fundamental Indexplus will offset losses from the drop in Fundamental Indexplus' long position.| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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