Correlation Between Pimco Preferred and Fundamental Indexplus
Can any of the company-specific risk be diversified away by investing in both Pimco Preferred and Fundamental Indexplus 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 Fundamental Indexplus 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 Fundamental Indexplus Tr, you can compare the effects of market volatilities on Pimco Preferred and Fundamental Indexplus 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 Fundamental Indexplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Preferred and Fundamental Indexplus.
Diversification Opportunities for Pimco Preferred and Fundamental Indexplus
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Fundamental is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Preferred And and Fundamental Indexplus Tr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Indexplus 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 Fundamental Indexplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Indexplus has no effect on the direction of Pimco Preferred i.e., Pimco Preferred and Fundamental Indexplus go up and down completely randomly.
Pair Corralation between Pimco Preferred and Fundamental Indexplus
Assuming the 90 days horizon Pimco Preferred And is expected to under-perform the Fundamental Indexplus. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Preferred And is 6.61 times less risky than Fundamental Indexplus. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Fundamental Indexplus Tr is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,787 in Fundamental Indexplus Tr on August 25, 2024 and sell it today you would lose (5.00) from holding Fundamental Indexplus Tr or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Preferred And vs. Fundamental Indexplus Tr
Performance |
| Timeline |
| Pimco Preferred And |
| Fundamental Indexplus |
Pimco Preferred and Fundamental Indexplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Preferred and Fundamental Indexplus
The main advantage of trading using opposite Pimco Preferred and Fundamental Indexplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Preferred position performs unexpectedly, Fundamental Indexplus 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 Fundamental Indexplus will offset losses from the drop in Fundamental Indexplus' 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 |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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