Correlation Between Pimco Foreign and Gnma Fund
Can any of the company-specific risk be diversified away by investing in both Pimco Foreign and Gnma Fund 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 Foreign and Gnma Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Foreign Bond and Gnma Fund Institutional, you can compare the effects of market volatilities on Pimco Foreign and Gnma Fund 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 Foreign with a short position of Gnma Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Foreign and Gnma Fund.
Diversification Opportunities for Pimco Foreign and Gnma Fund
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and Gnma is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Foreign Bond and Gnma Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gnma Fund Institutional and Pimco Foreign 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 Foreign Bond are associated (or correlated) with Gnma Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gnma Fund Institutional has no effect on the direction of Pimco Foreign i.e., Pimco Foreign and Gnma Fund go up and down completely randomly.
Pair Corralation between Pimco Foreign and Gnma Fund
Assuming the 90 days horizon Pimco Foreign Bond is expected to under-perform the Gnma Fund. In addition to that, Pimco Foreign is 1.39 times more volatile than Gnma Fund Institutional. It trades about -0.09 of its total potential returns per unit of risk. Gnma Fund Institutional is currently generating about 0.14 per unit of volatility. If you would invest 927.00 in Gnma Fund Institutional on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Gnma Fund Institutional or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pimco Foreign Bond vs. Gnma Fund Institutional
Performance |
| Timeline |
| Pimco Foreign Bond |
| Gnma Fund Institutional |
Pimco Foreign and Gnma Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Foreign and Gnma Fund
The main advantage of trading using opposite Pimco Foreign and Gnma Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Foreign position performs unexpectedly, Gnma Fund 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 Gnma Fund will offset losses from the drop in Gnma Fund's long position.| Pimco Foreign vs. Touchstone Ultra Short | Pimco Foreign vs. Old Westbury Short Term | Pimco Foreign vs. Goldman Sachs Short Term | Pimco Foreign vs. Federated Ultrashort Bond |
| Gnma Fund vs. Pimco Rae Worldwide | Gnma Fund vs. Pimco Rae Worldwide | Gnma Fund vs. Pimco Rae Worldwide | Gnma Fund 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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