Correlation Between Pimco Emerging and Investment Grade
Can any of the company-specific risk be diversified away by investing in both Pimco Emerging and Investment Grade 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 Investment Grade 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 Investment Grade Porate, you can compare the effects of market volatilities on Pimco Emerging and Investment Grade 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 Investment Grade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Emerging and Investment Grade.
Diversification Opportunities for Pimco Emerging and Investment Grade
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Investment is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Emerging Markets and Investment Grade Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Grade Porate 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 Investment Grade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Grade Porate has no effect on the direction of Pimco Emerging i.e., Pimco Emerging and Investment Grade go up and down completely randomly.
Pair Corralation between Pimco Emerging and Investment Grade
Assuming the 90 days horizon Pimco Emerging Markets is expected to generate 0.93 times more return on investment than Investment Grade. However, Pimco Emerging Markets is 1.08 times less risky than Investment Grade. It trades about -0.1 of its potential returns per unit of risk. Investment Grade Porate is currently generating about -0.1 per unit of risk. If you would invest 622.00 in Pimco Emerging Markets on October 31, 2024 and sell it today you would lose (16.00) from holding Pimco Emerging Markets or give up 2.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Emerging Markets vs. Investment Grade Porate
Performance |
| Timeline |
| Pimco Emerging Markets |
| Investment Grade Porate |
Pimco Emerging and Investment Grade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Emerging and Investment Grade
The main advantage of trading using opposite Pimco Emerging and Investment Grade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Emerging position performs unexpectedly, Investment Grade 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 Investment Grade will offset losses from the drop in Investment Grade's long position.| Pimco Emerging vs. Dreyfusstandish Global Fixed | Pimco Emerging vs. Gmo Global Equity | Pimco Emerging vs. Old Westbury Fixed | Pimco Emerging vs. Gmo Global Equity |
| Investment Grade vs. Cref Money Market | Investment Grade vs. Vanguard Money Market | Investment Grade vs. Chestnut Street Exchange | Investment Grade vs. Money Market Obligations |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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