Correlation Between Pimco Foreign and Pimco Emerging
Can any of the company-specific risk be diversified away by investing in both Pimco Foreign 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 Pimco Foreign and Pimco Emerging 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 Pimco Emerging Local, you can compare the effects of market volatilities on Pimco Foreign 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 Pimco Foreign with a short position of Pimco Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Foreign and Pimco Emerging.
Diversification Opportunities for Pimco Foreign and Pimco Emerging
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pimco and Pimco is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Foreign Bond 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 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 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 Pimco Foreign i.e., Pimco Foreign and Pimco Emerging go up and down completely randomly.
Pair Corralation between Pimco Foreign and Pimco Emerging
Assuming the 90 days horizon Pimco Foreign Bond is expected to under-perform the Pimco Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Foreign Bond is 1.11 times less risky than Pimco Emerging. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Pimco Emerging Local is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 576.00 in Pimco Emerging Local on September 1, 2024 and sell it today you would lose (5.00) from holding Pimco Emerging Local or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pimco Foreign Bond vs. Pimco Emerging Local
Performance |
| Timeline |
| Pimco Foreign Bond |
| Pimco Emerging Local |
Pimco Foreign and Pimco Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Foreign and Pimco Emerging
The main advantage of trading using opposite Pimco Foreign and Pimco Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Foreign 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.| 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 |
| Pimco Emerging vs. Pimco Rae Worldwide | Pimco Emerging vs. Pimco Rae Worldwide | Pimco Emerging vs. Pimco Rae Worldwide | Pimco Emerging 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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