Correlation Between Pimco Inflation and Real Return
Can any of the company-specific risk be diversified away by investing in both Pimco Inflation and Real Return 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 Inflation and Real Return into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Inflation Response and Real Return Fund, you can compare the effects of market volatilities on Pimco Inflation and Real Return 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 Inflation with a short position of Real Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Inflation and Real Return.
Diversification Opportunities for Pimco Inflation and Real Return
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Real is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Inflation Response and Real Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Return Fund and Pimco Inflation 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 Inflation Response are associated (or correlated) with Real Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Return Fund has no effect on the direction of Pimco Inflation i.e., Pimco Inflation and Real Return go up and down completely randomly.
Pair Corralation between Pimco Inflation and Real Return
Assuming the 90 days horizon Pimco Inflation Response is expected to generate 1.59 times more return on investment than Real Return. However, Pimco Inflation is 1.59 times more volatile than Real Return Fund. It trades about 0.11 of its potential returns per unit of risk. Real Return Fund is currently generating about 0.07 per unit of risk. If you would invest 698.00 in Pimco Inflation Response on September 12, 2024 and sell it today you would earn a total of 141.00 from holding Pimco Inflation Response or generate 20.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Inflation Response vs. Real Return Fund
Performance |
| Timeline |
| Pimco Inflation Response |
| Real Return Fund |
Pimco Inflation and Real Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Inflation and Real Return
The main advantage of trading using opposite Pimco Inflation and Real Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Inflation position performs unexpectedly, Real Return 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 Real Return will offset losses from the drop in Real Return's long position.| Pimco Inflation vs. Touchstone International Equity | Pimco Inflation vs. Ms Global Fixed | Pimco Inflation vs. Dodge International Stock | Pimco Inflation vs. Gmo Global Equity |
| Real Return vs. Vanguard Inflation Protected Securities | Real Return vs. Vanguard Inflation Protected Securities | Real Return vs. American Funds Inflation | Real Return vs. American Funds Inflation |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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