Correlation Between Pimco Foreign and Long-term
Can any of the company-specific risk be diversified away by investing in both Pimco Foreign and Long-term 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 Long-term 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 Long Term Government Fund, you can compare the effects of market volatilities on Pimco Foreign and Long-term 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 Long-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Foreign and Long-term.
Diversification Opportunities for Pimco Foreign and Long-term
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pimco and Long-term is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Foreign Bond and Long Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Term Government 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 Long-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Term Government has no effect on the direction of Pimco Foreign i.e., Pimco Foreign and Long-term go up and down completely randomly.
Pair Corralation between Pimco Foreign and Long-term
Assuming the 90 days horizon Pimco Foreign Bond is expected to under-perform the Long-term. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Foreign Bond is 2.37 times less risky than Long-term. The mutual fund trades about -0.22 of its potential returns per unit of risk. The Long Term Government Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,416 in Long Term Government Fund on August 28, 2024 and sell it today you would earn a total of 18.00 from holding Long Term Government Fund or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Foreign Bond vs. Long Term Government Fund
Performance |
| Timeline |
| Pimco Foreign Bond |
| Long Term Government |
Pimco Foreign and Long-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Foreign and Long-term
The main advantage of trading using opposite Pimco Foreign and Long-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Foreign position performs unexpectedly, Long-term 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 Long-term will offset losses from the drop in Long-term's long position.| Pimco Foreign vs. Pimco Rae Worldwide | Pimco Foreign vs. Pimco Realestaterealreturn Strategy | Pimco Foreign vs. Pimco Rae Worldwide | Pimco Foreign vs. Pimco Rae Worldwide |
| Long-term vs. Neuberger Berman Real | Long-term vs. Deutsche Real Estate | Long-term vs. Pender Real Estate | Long-term vs. Virtus Real Estate |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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