Correlation Between Long-term and Pimco Long
Can any of the company-specific risk be diversified away by investing in both Long-term and Pimco Long 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 Long 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 Long Duration, you can compare the effects of market volatilities on Long-term and Pimco Long 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 Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long-term and Pimco Long.
Diversification Opportunities for Long-term and Pimco Long
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Long-term and Pimco is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Long Term Government Fund and Pimco Long Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Long Duration 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 Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Long Duration has no effect on the direction of Long-term i.e., Long-term and Pimco Long go up and down completely randomly.
Pair Corralation between Long-term and Pimco Long
Assuming the 90 days horizon Long Term Government Fund is expected to generate 16.73 times more return on investment than Pimco Long. However, Long-term is 16.73 times more volatile than Pimco Long Duration. It trades about 0.03 of its potential returns per unit of risk. Pimco Long Duration is currently generating about 0.02 per unit of risk. If you would invest 1,491 in Long Term Government Fund on September 2, 2024 and sell it today you would lose (41.00) from holding Long Term Government Fund or give up 2.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Long Term Government Fund vs. Pimco Long Duration
Performance |
| Timeline |
| Long Term Government |
| Pimco Long Duration |
Long-term and Pimco Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Long-term and Pimco Long
The main advantage of trading using opposite Long-term and Pimco Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long-term position performs unexpectedly, Pimco Long 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 Long will offset losses from the drop in Pimco Long's long position.| Long-term vs. Western Asset Diversified | Long-term vs. Aqr Sustainable Long Short | Long-term vs. Harbor Diversified International | Long-term vs. Vanguard Developed Markets |
| Pimco Long vs. Pimco Rae Worldwide | Pimco Long vs. Pimco Rae Worldwide | Pimco Long vs. Pimco Rae Worldwide | Pimco Long 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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