Correlation Between Pimco Fundamental and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Pimco Fundamental and Dow Jones 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 Fundamental and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Fundamental Advantage and Dow Jones Industrial, you can compare the effects of market volatilities on Pimco Fundamental and Dow Jones 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 Fundamental with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Fundamental and Dow Jones.
Diversification Opportunities for Pimco Fundamental and Dow Jones
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pimco and Dow is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Fundamental Advantage and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Pimco Fundamental 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 Fundamental Advantage are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Pimco Fundamental i.e., Pimco Fundamental and Dow Jones go up and down completely randomly.
Pair Corralation between Pimco Fundamental and Dow Jones
Assuming the 90 days horizon Pimco Fundamental is expected to generate 39.11 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Pimco Fundamental Advantage is 1.55 times less risky than Dow Jones. It trades about 0.01 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,312,955 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 1,159,251 from holding Dow Jones Industrial or generate 34.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Fundamental Advantage vs. Dow Jones Industrial
Performance |
| Timeline |
Pimco Fundamental and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Pimco Fundamental Advantage
Pair trading matchups for Pimco Fundamental
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Pimco Fundamental and Dow Jones
The main advantage of trading using opposite Pimco Fundamental and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Fundamental position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Pimco Fundamental vs. Pimco Rae Worldwide | Pimco Fundamental vs. Pimco Realestaterealreturn Strategy | Pimco Fundamental vs. Pimco Funds | Pimco Fundamental vs. Pimco Rae Worldwide |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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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