Correlation Between Pimco Fundamental and Long Term
Can any of the company-specific risk be diversified away by investing in both Pimco Fundamental and Long Term 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 Long Term 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 Long Term Government Fund, you can compare the effects of market volatilities on Pimco Fundamental and Long Term 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 Long Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Fundamental and Long Term.
Diversification Opportunities for Pimco Fundamental and Long Term
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Long is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Fundamental Advantage and Long Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Term Government 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 Long Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Term Government has no effect on the direction of Pimco Fundamental i.e., Pimco Fundamental and Long Term go up and down completely randomly.
Pair Corralation between Pimco Fundamental and Long Term
Assuming the 90 days horizon Pimco Fundamental Advantage is expected to under-perform the Long Term. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Fundamental Advantage is 29.99 times less risky than Long Term. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Long Term Government Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,442 in Long Term Government Fund on September 13, 2024 and sell it today you would lose (11.00) from holding Long Term Government Fund or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Fundamental Advantage vs. Long Term Government Fund
Performance |
| Timeline |
| Pimco Fundamental |
| Long Term Government |
Pimco Fundamental and Long Term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Fundamental and Long Term
The main advantage of trading using opposite Pimco Fundamental and Long Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Fundamental position performs unexpectedly, Long Term 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 Long Term will offset losses from the drop in Long Term's long position.| Pimco Fundamental vs. Dodge Cox Stock | Pimco Fundamental vs. T Rowe Price | Pimco Fundamental vs. Alternative Asset Allocation | Pimco Fundamental vs. Qs Large Cap |
| Long Term vs. Pimco Rae Worldwide | Long Term vs. Pimco Foreign Bond | Long Term vs. Pimco Preferred And | Long Term vs. Pimco Fundamental Advantage |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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