Correlation Between Pimco Foreign and Pimco Long
Can any of the company-specific risk be diversified away by investing in both Pimco Foreign and Pimco Long 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 Long 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 Long Duration, you can compare the effects of market volatilities on Pimco Foreign and Pimco Long 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 Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Foreign and Pimco Long.
Diversification Opportunities for Pimco Foreign and Pimco Long
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and Pimco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Foreign Bond and Pimco Long Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Long Duration 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 Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Long Duration has no effect on the direction of Pimco Foreign i.e., Pimco Foreign and Pimco Long go up and down completely randomly.
Pair Corralation between Pimco Foreign and Pimco Long
Assuming the 90 days horizon Pimco Foreign is expected to generate 1.04 times less return on investment than Pimco Long. But when comparing it to its historical volatility, Pimco Foreign Bond is 1.81 times less risky than Pimco Long. It trades about 0.03 of its potential returns per unit of risk. Pimco Long Duration is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 701.00 in Pimco Long Duration on September 2, 2024 and sell it today you would earn a total of 35.00 from holding Pimco Long Duration or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Foreign Bond vs. Pimco Long Duration
Performance |
| Timeline |
| Pimco Foreign Bond |
| Pimco Long Duration |
Pimco Foreign and Pimco Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Foreign and Pimco Long
The main advantage of trading using opposite Pimco Foreign and Pimco Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Foreign position performs unexpectedly, Pimco Long 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 Long will offset losses from the drop in Pimco Long's long position.| Pimco Foreign vs. Pimco Unconstrained Bond | Pimco Foreign vs. Pimco Global Multi Asset | Pimco Foreign vs. Pimco All Asset | Pimco Foreign vs. Pimco Emerging Markets |
| Pimco Long vs. Pimco Rae Worldwide | Pimco Long vs. Pimco Rae Worldwide | Pimco Long vs. Pimco Rae Worldwide | Pimco Long 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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