Correlation Between Foreign Bond and Pimco Stocksplus
Can any of the company-specific risk be diversified away by investing in both Foreign Bond and Pimco Stocksplus 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 Stocksplus 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 Stocksplus Ar, you can compare the effects of market volatilities on Foreign Bond and Pimco Stocksplus 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 Stocksplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Bond and Pimco Stocksplus.
Diversification Opportunities for Foreign Bond and Pimco Stocksplus
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Foreign and Pimco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Bond Fund and Pimco Stocksplus Ar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Stocksplus 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 Stocksplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Stocksplus has no effect on the direction of Foreign Bond i.e., Foreign Bond and Pimco Stocksplus go up and down completely randomly.
Pair Corralation between Foreign Bond and Pimco Stocksplus
Assuming the 90 days horizon Foreign Bond Fund is expected to generate 0.51 times more return on investment than Pimco Stocksplus. However, Foreign Bond Fund is 1.98 times less risky than Pimco Stocksplus. It trades about 0.05 of its potential returns per unit of risk. Pimco Stocksplus Ar is currently generating about -0.09 per unit of risk. If you would invest 735.00 in Foreign Bond Fund on September 2, 2024 and sell it today you would earn a total of 17.00 from holding Foreign Bond Fund or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foreign Bond Fund vs. Pimco Stocksplus Ar
Performance |
| Timeline |
| Foreign Bond |
| Pimco Stocksplus |
Foreign Bond and Pimco Stocksplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Bond and Pimco Stocksplus
The main advantage of trading using opposite Foreign Bond and Pimco Stocksplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Bond position performs unexpectedly, Pimco Stocksplus 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 Stocksplus will offset losses from the drop in Pimco Stocksplus' long position.| Foreign Bond vs. Jhancock Real Estate | Foreign Bond vs. Prudential Real Estate | Foreign Bond vs. Deutsche Real Estate | Foreign Bond vs. Fidelity Real Estate |
| Pimco Stocksplus vs. Pimco Rae Worldwide | Pimco Stocksplus vs. Pimco Rae Worldwide | Pimco Stocksplus vs. Pimco Rae Worldwide | Pimco Stocksplus vs. Pimco Rae Worldwide |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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