Correlation Between Foreign Bond and Pimco High
Can any of the company-specific risk be diversified away by investing in both Foreign Bond and Pimco High 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 High 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 High Yield, you can compare the effects of market volatilities on Foreign Bond and Pimco High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Bond and Pimco High.
Diversification Opportunities for Foreign Bond and Pimco High
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Foreign and Pimco is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Bond Fund and Pimco High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco High Yield 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco High Yield has no effect on the direction of Foreign Bond i.e., Foreign Bond and Pimco High go up and down completely randomly.
Pair Corralation between Foreign Bond and Pimco High
Assuming the 90 days horizon Foreign Bond Fund is expected to under-perform the Pimco High. In addition to that, Foreign Bond is 1.38 times more volatile than Pimco High Yield. It trades about -0.11 of its total potential returns per unit of risk. Pimco High Yield is currently generating about -0.09 per unit of volatility. If you would invest 866.00 in Pimco High Yield on November 1, 2024 and sell it today you would lose (19.00) from holding Pimco High Yield or give up 2.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foreign Bond Fund vs. Pimco High Yield
Performance |
| Timeline |
| Foreign Bond |
| Pimco High Yield |
Foreign Bond and Pimco High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Bond and Pimco High
The main advantage of trading using opposite Foreign Bond and Pimco High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Bond position performs unexpectedly, Pimco High 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 High will offset losses from the drop in Pimco High's long position.| Foreign Bond vs. Riverparknext Century Growth | Foreign Bond vs. Vy Baron Growth | Foreign Bond vs. The Equity Growth | Foreign Bond vs. Upright Growth Income |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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