Correlation Between Pimco Foreign and Foreign Bond
Can any of the company-specific risk be diversified away by investing in both Pimco Foreign and Foreign Bond 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 Foreign and Foreign Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Foreign Bond and Foreign Bond Fund, you can compare the effects of market volatilities on Pimco Foreign and Foreign Bond 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 Foreign with a short position of Foreign Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Foreign and Foreign Bond.
Diversification Opportunities for Pimco Foreign and Foreign Bond
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pimco and Foreign is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Foreign Bond and Foreign Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Bond and Pimco Foreign 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 Foreign Bond are associated (or correlated) with Foreign Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Bond has no effect on the direction of Pimco Foreign i.e., Pimco Foreign and Foreign Bond go up and down completely randomly.
Pair Corralation between Pimco Foreign and Foreign Bond
Assuming the 90 days horizon Pimco Foreign Bond is expected to generate 0.51 times more return on investment than Foreign Bond. However, Pimco Foreign Bond is 1.97 times less risky than Foreign Bond. It trades about 0.1 of its potential returns per unit of risk. Foreign Bond Fund is currently generating about 0.01 per unit of risk. If you would invest 890.00 in Pimco Foreign Bond on November 1, 2024 and sell it today you would earn a total of 100.00 from holding Pimco Foreign Bond or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Foreign Bond vs. Foreign Bond Fund
Performance |
| Timeline |
| Pimco Foreign Bond |
| Foreign Bond |
Pimco Foreign and Foreign Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Foreign and Foreign Bond
The main advantage of trading using opposite Pimco Foreign and Foreign Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Foreign position performs unexpectedly, Foreign Bond 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 Foreign Bond will offset losses from the drop in Foreign Bond's long position.| Pimco Foreign vs. Foreign Bond Fund | Pimco Foreign vs. Emerging Markets Bond | Pimco Foreign vs. High Yield Fund | Pimco Foreign vs. Low Duration Fund |
| Foreign Bond vs. Old Westbury Short Term | Foreign Bond vs. Aqr Sustainable Long Short | Foreign Bond vs. Oakhurst Short Duration | Foreign Bond vs. Aamhimco Short Duration |
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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