Correlation Between Foreign Bond and Pimco Rae
Can any of the company-specific risk be diversified away by investing in both Foreign Bond and Pimco Rae 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 Rae 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 Rae Plus, you can compare the effects of market volatilities on Foreign Bond and Pimco Rae 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 Rae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Bond and Pimco Rae.
Diversification Opportunities for Foreign Bond and Pimco Rae
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Foreign and Pimco is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Bond Fund and Pimco Rae Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Rae Plus 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 Rae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Rae Plus has no effect on the direction of Foreign Bond i.e., Foreign Bond and Pimco Rae go up and down completely randomly.
Pair Corralation between Foreign Bond and Pimco Rae
Assuming the 90 days horizon Foreign Bond is expected to generate 9.21 times less return on investment than Pimco Rae. But when comparing it to its historical volatility, Foreign Bond Fund is 1.99 times less risky than Pimco Rae. It trades about 0.03 of its potential returns per unit of risk. Pimco Rae Plus is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,411 in Pimco Rae Plus on August 31, 2024 and sell it today you would earn a total of 630.00 from holding Pimco Rae Plus or generate 44.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Foreign Bond Fund vs. Pimco Rae Plus
Performance |
| Timeline |
| Foreign Bond |
| Pimco Rae Plus |
Foreign Bond and Pimco Rae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Bond and Pimco Rae
The main advantage of trading using opposite Foreign Bond and Pimco Rae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Bond position performs unexpectedly, Pimco Rae 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 Rae will offset losses from the drop in Pimco Rae's long position.| Foreign Bond vs. Prudential Jennison International | Foreign Bond vs. Fidelity New Markets | Foreign Bond vs. Ohio Variable College |
| Pimco Rae vs. Us Government Plus | Pimco Rae vs. Goldman Sachs Government | Pimco Rae vs. Virtus Seix Government | Pimco Rae vs. Dunham Porategovernment Bond |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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