Correlation Between Foreign Bond and Pimco Emerging
Can any of the company-specific risk be diversified away by investing in both Foreign Bond 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 Foreign Bond and Pimco Emerging 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 Emerging Local, you can compare the effects of market volatilities on Foreign Bond 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 Foreign Bond with a short position of Pimco Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Bond and Pimco Emerging.
Diversification Opportunities for Foreign Bond and Pimco Emerging
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Foreign and Pimco is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Bond Fund 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 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 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 Foreign Bond i.e., Foreign Bond and Pimco Emerging go up and down completely randomly.
Pair Corralation between Foreign Bond and Pimco Emerging
Assuming the 90 days horizon Foreign Bond Fund is expected to generate 0.92 times more return on investment than Pimco Emerging. However, Foreign Bond Fund is 1.09 times less risky than Pimco Emerging. It trades about -0.1 of its potential returns per unit of risk. Pimco Emerging Local is currently generating about -0.1 per unit of risk. If you would invest 759.00 in Foreign Bond Fund on September 3, 2024 and sell it today you would lose (7.00) from holding Foreign Bond Fund or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foreign Bond Fund vs. Pimco Emerging Local
Performance |
| Timeline |
| Foreign Bond |
| Pimco Emerging Local |
Foreign Bond and Pimco Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Bond and Pimco Emerging
The main advantage of trading using opposite Foreign Bond and Pimco Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Bond 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.| Foreign Bond vs. Alliancebernstein Global High | Foreign Bond vs. Ab Global Real | Foreign Bond vs. Artisan Global Unconstrained | Foreign Bond vs. Ab Global Risk |
| Pimco Emerging vs. HUMANA INC | Pimco Emerging vs. Aquagold International | Pimco Emerging vs. Barloworld Ltd ADR | Pimco Emerging vs. Morningstar Unconstrained Allocation |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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