Correlation Between Long Term and Pimco Capital
Can any of the company-specific risk be diversified away by investing in both Long Term 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 Long Term and Pimco Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Long Term Government Fund and Pimco Capital Sec, you can compare the effects of market volatilities on Long Term 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 Long Term with a short position of Pimco Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long Term and Pimco Capital.
Diversification Opportunities for Long Term and Pimco Capital
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Long and Pimco is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Long Term Government Fund 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 Long Term 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 Long Term Government Fund 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 Long Term i.e., Long Term and Pimco Capital go up and down completely randomly.
Pair Corralation between Long Term and Pimco Capital
Assuming the 90 days horizon Long Term Government Fund is expected to generate 3.68 times more return on investment than Pimco Capital. However, Long Term is 3.68 times more volatile than Pimco Capital Sec. It trades about 0.3 of its potential returns per unit of risk. Pimco Capital Sec is currently generating about 0.36 per unit of risk. If you would invest 1,348 in Long Term Government Fund on November 9, 2024 and sell it today you would earn a total of 58.00 from holding Long Term Government Fund or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Long Term Government Fund vs. Pimco Capital Sec
Performance |
| Timeline |
| Long Term Government |
| Pimco Capital Sec |
Long Term and Pimco Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Long Term and Pimco Capital
The main advantage of trading using opposite Long Term and Pimco Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long Term 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.| Long Term vs. Guidemark Large Cap | Long Term vs. Tax Managed Large Cap | Long Term vs. Americafirst Large Cap | Long Term vs. Calvert Large Cap |
| Pimco Capital vs. Nuveen Preferred Securities | Pimco Capital vs. Cohen Steers Preferd | Pimco Capital vs. Pimco Income Fund | Pimco Capital vs. Pimco Floating Income |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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