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
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Pimco is 0.72. 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 is expected to generate 3.93 times less return on investment than Pimco Emerging. But when comparing it to its historical volatility, Pimco Foreign Bond is 1.05 times less risky than Pimco Emerging. It trades about 0.02 of its potential returns per unit of risk. Pimco Emerging Local is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 502.00 in Pimco Emerging Local on November 2, 2024 and sell it today you would earn a total of 70.00 from holding Pimco Emerging Local or generate 13.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| 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. Artisan High Income | Pimco Foreign vs. Lgm Risk Managed | Pimco Foreign vs. Chartwell Short Duration | Pimco Foreign vs. Pace High Yield |
| Pimco Emerging vs. Tax Free Conservative Income | Pimco Emerging vs. Tiaa Cref Lifestyle Conservative | Pimco Emerging vs. Global Diversified Income | Pimco Emerging vs. Calvert Conservative Allocation |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |