Correlation Between Pimco International and Pimco Extended
Can any of the company-specific risk be diversified away by investing in both Pimco International and Pimco Extended 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 International and Pimco Extended into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco International Bond and Pimco Extended Duration, you can compare the effects of market volatilities on Pimco International and Pimco Extended 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 International with a short position of Pimco Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco International and Pimco Extended.
Diversification Opportunities for Pimco International and Pimco Extended
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and Pimco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Pimco International Bond and Pimco Extended Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Extended Duration and Pimco International 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 International Bond are associated (or correlated) with Pimco Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Extended Duration has no effect on the direction of Pimco International i.e., Pimco International and Pimco Extended go up and down completely randomly.
Pair Corralation between Pimco International and Pimco Extended
Assuming the 90 days horizon Pimco International Bond is expected to under-perform the Pimco Extended. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco International Bond is 3.54 times less risky than Pimco Extended. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Pimco Extended Duration is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,368 in Pimco Extended Duration on September 3, 2024 and sell it today you would earn a total of 34.00 from holding Pimco Extended Duration or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco International Bond vs. Pimco Extended Duration
Performance |
| Timeline |
| Pimco International Bond |
| Pimco Extended Duration |
Pimco International and Pimco Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco International and Pimco Extended
The main advantage of trading using opposite Pimco International and Pimco Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco International position performs unexpectedly, Pimco Extended 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 Extended will offset losses from the drop in Pimco Extended's long position.| Pimco International vs. Small Pany Growth | Pimco International vs. Artisan Small Cap | Pimco International vs. Mid Cap Growth | Pimco International vs. Chase Growth Fund |
| Pimco Extended vs. Fidelity Series Long Term | Pimco Extended vs. Vanguard Long Term Government | Pimco Extended vs. Us Treasury Long Term | Pimco Extended vs. Us Treasury Long Term |
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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