Correlation Between Pimco Emerging and Payden Emerging
Can any of the company-specific risk be diversified away by investing in both Pimco Emerging and Payden Emerging 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 Emerging and Payden Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Emerging Local and Payden Emerging Markets, you can compare the effects of market volatilities on Pimco Emerging and Payden Emerging 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 Emerging with a short position of Payden Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Emerging and Payden Emerging.
Diversification Opportunities for Pimco Emerging and Payden Emerging
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between PIMCO and Payden is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Emerging Local and Payden Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Emerging Markets and Pimco Emerging 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 Emerging Local are associated (or correlated) with Payden Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Emerging Markets has no effect on the direction of Pimco Emerging i.e., Pimco Emerging and Payden Emerging go up and down completely randomly.
Pair Corralation between Pimco Emerging and Payden Emerging
Assuming the 90 days horizon Pimco Emerging Local is expected to generate 0.99 times more return on investment than Payden Emerging. However, Pimco Emerging Local is 1.01 times less risky than Payden Emerging. It trades about -0.08 of its potential returns per unit of risk. Payden Emerging Markets is currently generating about -0.09 per unit of risk. If you would invest 574.00 in Pimco Emerging Local on August 29, 2024 and sell it today you would lose (5.00) from holding Pimco Emerging Local or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Emerging Local vs. Payden Emerging Markets
Performance |
| Timeline |
| Pimco Emerging Local |
| Payden Emerging Markets |
Pimco Emerging and Payden Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Emerging and Payden Emerging
The main advantage of trading using opposite Pimco Emerging and Payden Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Emerging position performs unexpectedly, Payden Emerging 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 Payden Emerging will offset losses from the drop in Payden Emerging's long position.| Pimco Emerging vs. Lord Abbett Small | Pimco Emerging vs. Applied Finance Explorer | Pimco Emerging vs. Hennessy Nerstone Mid | Pimco Emerging vs. Vanguard Small Cap Value |
| Payden Emerging vs. Fidelity Managed Retirement | Payden Emerging vs. Target Retirement 2040 | Payden Emerging vs. Blackrock Moderate Prepared | Payden Emerging vs. Wisdomtree Siegel Moderate |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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