Correlation Between Pimco Foreign and Pimco Capital
Can any of the company-specific risk be diversified away by investing in both Pimco Foreign and Pimco Capital 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 Foreign and Pimco Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Foreign Bond and Pimco Capital Sec, you can compare the effects of market volatilities on Pimco Foreign and Pimco Capital 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 Foreign with a short position of Pimco Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Foreign and Pimco Capital.
Diversification Opportunities for Pimco Foreign and Pimco Capital
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Pimco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Foreign Bond and Pimco Capital Sec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Capital Sec and Pimco Foreign 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 Foreign Bond are associated (or correlated) with Pimco Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Capital Sec has no effect on the direction of Pimco Foreign i.e., Pimco Foreign and Pimco Capital go up and down completely randomly.
Pair Corralation between Pimco Foreign and Pimco Capital
Assuming the 90 days horizon Pimco Foreign Bond is expected to generate 1.08 times more return on investment than Pimco Capital. However, Pimco Foreign is 1.08 times more volatile than Pimco Capital Sec. It trades about 0.19 of its potential returns per unit of risk. Pimco Capital Sec is currently generating about 0.03 per unit of risk. If you would invest 989.00 in Pimco Foreign Bond on August 28, 2024 and sell it today you would earn a total of 7.00 from holding Pimco Foreign Bond or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Foreign Bond vs. Pimco Capital Sec
Performance |
| Timeline |
| Pimco Foreign Bond |
| Pimco Capital Sec |
Pimco Foreign and Pimco Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Foreign and Pimco Capital
The main advantage of trading using opposite Pimco Foreign and Pimco Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Foreign position performs unexpectedly, Pimco Capital 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 Pimco Capital will offset losses from the drop in Pimco Capital's long position.| Pimco Foreign vs. Pimco Rae Worldwide | Pimco Foreign vs. Pimco Rae Worldwide | Pimco Foreign vs. Pimco Rae Worldwide | Pimco Foreign vs. Pimco Rae Worldwide |
| Pimco Capital vs. Pimco Mortgage Opportunities | Pimco Capital vs. Pimco Floating Income | Pimco Capital vs. Pimco High Yield | Pimco Capital vs. Pimco Income Fund |
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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