Correlation Between Long-term and Pimco Emerging
Can any of the company-specific risk be diversified away by investing in both Long-term and Pimco Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Long-term and Pimco Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long-term and Pimco Emerging.
Diversification Opportunities for Long-term and Pimco Emerging
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Long-term and Pimco is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Long Term Government Fund and Pimco Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Emerging Markets has no effect on the direction of Long-term i.e., Long-term and Pimco Emerging go up and down completely randomly.
Pair Corralation between Long-term and Pimco Emerging
Assuming the 90 days horizon Long Term Government Fund is expected to under-perform the Pimco Emerging. In addition to that, Long-term is 2.29 times more volatile than Pimco Emerging Markets. It trades about -0.21 of its total potential returns per unit of risk. Pimco Emerging Markets is currently generating about -0.23 per unit of volatility. If you would invest 740.00 in Pimco Emerging Markets on August 25, 2024 and sell it today you would lose (25.00) from holding Pimco Emerging Markets or give up 3.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Long Term Government Fund vs. Pimco Emerging Markets
Performance |
| Timeline |
| Long Term Government |
| Pimco Emerging Markets |
Long-term and Pimco Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Long-term and Pimco Emerging
The main advantage of trading using opposite Long-term and Pimco Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long-term position performs unexpectedly, Pimco Emerging 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 Emerging will offset losses from the drop in Pimco Emerging's long position.| Long-term vs. Us Government Securities | Long-term vs. Vanguard Short Term Government | Long-term vs. Ab Government Exchange | Long-term vs. Dunham Porategovernment Bond |
| Pimco Emerging vs. Pimco Rae Worldwide | Pimco Emerging vs. Pimco Rae Worldwide | Pimco Emerging vs. Pimco Rae Worldwide | Pimco Emerging vs. Pimco Rae Worldwide |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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