Correlation Between Pimco Commoditiesplus and Commodityrealreturn
Can any of the company-specific risk be diversified away by investing in both Pimco Commoditiesplus and Commodityrealreturn 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 Commoditiesplus and Commodityrealreturn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Commoditiesplus Strategy and Commodityrealreturn Strategy Fund, you can compare the effects of market volatilities on Pimco Commoditiesplus and Commodityrealreturn 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 Commoditiesplus with a short position of Commodityrealreturn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Commoditiesplus and Commodityrealreturn.
Diversification Opportunities for Pimco Commoditiesplus and Commodityrealreturn
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Commodityrealreturn is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Commoditiesplus Strategy and Commodityrealreturn Strategy F in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commodityrealreturn and Pimco Commoditiesplus 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 Commoditiesplus Strategy are associated (or correlated) with Commodityrealreturn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commodityrealreturn has no effect on the direction of Pimco Commoditiesplus i.e., Pimco Commoditiesplus and Commodityrealreturn go up and down completely randomly.
Pair Corralation between Pimco Commoditiesplus and Commodityrealreturn
Assuming the 90 days horizon Pimco Commoditiesplus Strategy is expected to under-perform the Commodityrealreturn. In addition to that, Pimco Commoditiesplus is 1.23 times more volatile than Commodityrealreturn Strategy Fund. It trades about -0.02 of its total potential returns per unit of risk. Commodityrealreturn Strategy Fund is currently generating about 0.01 per unit of volatility. If you would invest 1,330 in Commodityrealreturn Strategy Fund on September 12, 2024 and sell it today you would earn a total of 9.00 from holding Commodityrealreturn Strategy Fund or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Pimco Commoditiesplus Strategy vs. Commodityrealreturn Strategy F
Performance |
| Timeline |
| Pimco Commoditiesplus |
| Commodityrealreturn |
Pimco Commoditiesplus and Commodityrealreturn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Commoditiesplus and Commodityrealreturn
The main advantage of trading using opposite Pimco Commoditiesplus and Commodityrealreturn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Commoditiesplus position performs unexpectedly, Commodityrealreturn 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 Commodityrealreturn will offset losses from the drop in Commodityrealreturn's long position.The idea behind Pimco Commoditiesplus Strategy and Commodityrealreturn Strategy Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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