Correlation Between Pimco Foreign and Total Return

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Pimco Foreign and Total Return 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 Total Return 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 Total Return Fund, you can compare the effects of market volatilities on Pimco Foreign and Total Return 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 Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Foreign and Total Return.

Diversification Opportunities for Pimco Foreign and Total Return

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Pimco and Total is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Foreign Bond and Total Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return 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 Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return has no effect on the direction of Pimco Foreign i.e., Pimco Foreign and Total Return go up and down completely randomly.

Pair Corralation between Pimco Foreign and Total Return

Assuming the 90 days horizon Pimco Foreign Bond is expected to under-perform the Total Return. In addition to that, Pimco Foreign is 1.35 times more volatile than Total Return Fund. It trades about -0.09 of its total potential returns per unit of risk. Total Return Fund is currently generating about 0.14 per unit of volatility. If you would invest  763.00  in Total Return Fund on September 1, 2024 and sell it today you would earn a total of  8.00  from holding Total Return Fund or generate 1.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

Pimco Foreign Bond  vs.  Total Return Fund

 Performance 
       Timeline  
Pimco Foreign Bond 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pimco Foreign Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Foreign is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Total Return 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Total Return Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Total Return is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Foreign and Total Return Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pimco Foreign and Total Return

The main advantage of trading using opposite Pimco Foreign and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Foreign position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.
The idea behind Pimco Foreign Bond and Total Return Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Stocks Directory module to find actively traded stocks across global markets.

Other Complementary Tools

Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities