Correlation Between Pimco Preferred and Pimco Rae
Can any of the company-specific risk be diversified away by investing in both Pimco Preferred and Pimco Rae 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 Preferred and Pimco Rae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Preferred And and Pimco Rae Worldwide, you can compare the effects of market volatilities on Pimco Preferred and Pimco Rae 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 Preferred with a short position of Pimco Rae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Preferred and Pimco Rae.
Diversification Opportunities for Pimco Preferred and Pimco Rae
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Pimco is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Preferred And and Pimco Rae Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Rae Worldwide and Pimco Preferred 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 Preferred And are associated (or correlated) with Pimco Rae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Rae Worldwide has no effect on the direction of Pimco Preferred i.e., Pimco Preferred and Pimco Rae go up and down completely randomly.
Pair Corralation between Pimco Preferred and Pimco Rae
Assuming the 90 days horizon Pimco Preferred is expected to generate 1.66 times less return on investment than Pimco Rae. But when comparing it to its historical volatility, Pimco Preferred And is 3.15 times less risky than Pimco Rae. It trades about 0.26 of its potential returns per unit of risk. Pimco Rae Worldwide is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 754.00 in Pimco Rae Worldwide on August 25, 2024 and sell it today you would earn a total of 62.00 from holding Pimco Rae Worldwide or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Pimco Preferred And vs. Pimco Rae Worldwide
Performance |
| Timeline |
| Pimco Preferred And |
| Pimco Rae Worldwide |
Pimco Preferred and Pimco Rae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Preferred and Pimco Rae
The main advantage of trading using opposite Pimco Preferred and Pimco Rae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Preferred position performs unexpectedly, Pimco Rae 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 Rae will offset losses from the drop in Pimco Rae's long position.| Pimco Preferred vs. Pimco Mortgage Opportunities | Pimco Preferred vs. Pimco Floating Income | Pimco Preferred vs. Pimco High Yield | Pimco Preferred vs. Pimco Income Fund |
| Pimco Rae vs. Pimco Rae Worldwide | Pimco Rae vs. Pimco Rae Worldwide | Pimco Rae vs. Pimco Foreign Bond | Pimco Rae vs. Pimco Preferred And |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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