Correlation Between Pimco Foreign and Fundamental Indexplus
Can any of the company-specific risk be diversified away by investing in both Pimco Foreign and Fundamental Indexplus 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 Fundamental Indexplus 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 Fundamental Indexplus Tr, you can compare the effects of market volatilities on Pimco Foreign and Fundamental Indexplus 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 Fundamental Indexplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Foreign and Fundamental Indexplus.
Diversification Opportunities for Pimco Foreign and Fundamental Indexplus
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pimco and Fundamental is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Foreign Bond and Fundamental Indexplus Tr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Indexplus 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 Fundamental Indexplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Indexplus has no effect on the direction of Pimco Foreign i.e., Pimco Foreign and Fundamental Indexplus go up and down completely randomly.
Pair Corralation between Pimco Foreign and Fundamental Indexplus
Assuming the 90 days horizon Pimco Foreign Bond is expected to under-perform the Fundamental Indexplus. 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 Fundamental Indexplus. The mutual fund trades about -0.27 of its potential returns per unit of risk. The Fundamental Indexplus Tr is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,776 in Fundamental Indexplus Tr on August 25, 2024 and sell it today you would earn a total of 6.00 from holding Fundamental Indexplus Tr or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Foreign Bond vs. Fundamental Indexplus Tr
Performance |
| Timeline |
| Pimco Foreign Bond |
| Fundamental Indexplus |
Pimco Foreign and Fundamental Indexplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Foreign and Fundamental Indexplus
The main advantage of trading using opposite Pimco Foreign and Fundamental Indexplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Foreign position performs unexpectedly, Fundamental Indexplus 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 Fundamental Indexplus will offset losses from the drop in Fundamental Indexplus' long position.| Pimco Foreign vs. Dws Government Money | Pimco Foreign vs. Transamerica Intermediate Muni | Pimco Foreign vs. Pace Municipal Fixed | Pimco Foreign vs. T Rowe Price |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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