Correlation Between Foreign Bond and Pimco Long
Can any of the company-specific risk be diversified away by investing in both Foreign Bond 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 Foreign Bond and Pimco Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foreign Bond Fund and Pimco Long Duration, you can compare the effects of market volatilities on Foreign Bond 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 Foreign Bond with a short position of Pimco Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Bond and Pimco Long.
Diversification Opportunities for Foreign Bond and Pimco Long
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Foreign and Pimco is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Bond 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 Foreign Bond 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 Foreign Bond 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 Foreign Bond i.e., Foreign Bond and Pimco Long go up and down completely randomly.
Pair Corralation between Foreign Bond and Pimco Long
Assuming the 90 days horizon Foreign Bond is expected to generate 2.19 times less return on investment than Pimco Long. But when comparing it to its historical volatility, Foreign Bond Fund is 1.91 times less risky than Pimco Long. It trades about 0.21 of its potential returns per unit of risk. Pimco Long Duration is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 702.00 in Pimco Long Duration on November 28, 2024 and sell it today you would earn a total of 25.00 from holding Pimco Long Duration or generate 3.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foreign Bond Fund vs. Pimco Long Duration
Performance |
| Timeline |
| Foreign Bond |
| Pimco Long Duration |
Foreign Bond and Pimco Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Bond and Pimco Long
The main advantage of trading using opposite Foreign Bond and Pimco Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Bond 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.| Foreign Bond vs. Barings Active Short | Foreign Bond vs. Metropolitan West Ultra | Foreign Bond vs. Delaware Investments Ultrashort | Foreign Bond vs. Siit Ultra Short |
| Pimco Long vs. Payden High Income | Pimco Long vs. T Rowe Price | Pimco Long vs. Pace High Yield | Pimco Long vs. City National Rochdale |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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