Correlation Between Pimco Emerging and Pimco Emerging
Can any of the company-specific risk be diversified away by investing in both Pimco Emerging and Pimco Emerging 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 Emerging and Pimco Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Emerging Markets and Pimco Emerging Local, you can compare the effects of market volatilities on Pimco Emerging and Pimco Emerging 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 Emerging with a short position of Pimco Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Emerging and Pimco Emerging.
Diversification Opportunities for Pimco Emerging and Pimco Emerging
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pimco and Pimco is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Emerging Markets and Pimco Emerging Local in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Emerging Local and Pimco Emerging 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 Emerging Markets are associated (or correlated) with Pimco Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Emerging Local has no effect on the direction of Pimco Emerging i.e., Pimco Emerging and Pimco Emerging go up and down completely randomly.
Pair Corralation between Pimco Emerging and Pimco Emerging
Assuming the 90 days horizon Pimco Emerging Markets is expected to generate 0.75 times more return on investment than Pimco Emerging. However, Pimco Emerging Markets is 1.34 times less risky than Pimco Emerging. It trades about 0.09 of its potential returns per unit of risk. Pimco Emerging Local is currently generating about 0.07 per unit of risk. If you would invest 525.00 in Pimco Emerging Markets on December 1, 2024 and sell it today you would earn a total of 88.00 from holding Pimco Emerging Markets or generate 16.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Emerging Markets vs. Pimco Emerging Local
Performance |
| Timeline |
| Pimco Emerging Markets |
| Pimco Emerging Local |
Pimco Emerging and Pimco Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Emerging and Pimco Emerging
The main advantage of trading using opposite Pimco Emerging and Pimco Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Emerging position performs unexpectedly, Pimco Emerging 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 Emerging will offset losses from the drop in Pimco Emerging's long position.The idea behind Pimco Emerging Markets and Pimco Emerging Local pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pimco Emerging vs. Gmo High Yield | Pimco Emerging vs. Virtus High Yield | Pimco Emerging vs. Siit High Yield | Pimco Emerging vs. Payden High Income |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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