Correlation Between Foreign Bond and Pimco Total
Can any of the company-specific risk be diversified away by investing in both Foreign Bond and Pimco Total 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 Total 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 Total Return, you can compare the effects of market volatilities on Foreign Bond and Pimco Total 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 Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Bond and Pimco Total.
Diversification Opportunities for Foreign Bond and Pimco Total
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Foreign and Pimco is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Bond Fund and Pimco Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Total Return 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 Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Total Return has no effect on the direction of Foreign Bond i.e., Foreign Bond and Pimco Total go up and down completely randomly.
Pair Corralation between Foreign Bond and Pimco Total
Assuming the 90 days horizon Foreign Bond is expected to generate 3.44 times less return on investment than Pimco Total. In addition to that, Foreign Bond is 1.06 times more volatile than Pimco Total Return. It trades about 0.01 of its total potential returns per unit of risk. Pimco Total Return is currently generating about 0.04 per unit of volatility. If you would invest 809.00 in Pimco Total Return on August 31, 2024 and sell it today you would earn a total of 54.00 from holding Pimco Total Return or generate 6.67% 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 Total Return
Performance |
| Timeline |
| Foreign Bond |
| Pimco Total Return |
Foreign Bond and Pimco Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Bond and Pimco Total
The main advantage of trading using opposite Foreign Bond and Pimco Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Bond position performs unexpectedly, Pimco Total 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 Total will offset losses from the drop in Pimco Total's long position.| Foreign Bond vs. Prudential Jennison International | Foreign Bond vs. Fidelity New Markets | Foreign Bond vs. Ohio Variable College |
| Pimco Total vs. Gmo High Yield | Pimco Total vs. Dunham High Yield | Pimco Total vs. Mesirow Financial High | Pimco Total vs. Alpine High Yield |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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