Correlation Between Pimco Global and Kensington Dynamic
Can any of the company-specific risk be diversified away by investing in both Pimco Global and Kensington Dynamic 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 Global and Kensington Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Global Multi Asset and Kensington Dynamic Growth, you can compare the effects of market volatilities on Pimco Global and Kensington Dynamic 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 Global with a short position of Kensington Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Global and Kensington Dynamic.
Diversification Opportunities for Pimco Global and Kensington Dynamic
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Kensington is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Global Multi Asset and Kensington Dynamic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Dynamic Growth and Pimco Global 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 Global Multi Asset are associated (or correlated) with Kensington Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Dynamic Growth has no effect on the direction of Pimco Global i.e., Pimco Global and Kensington Dynamic go up and down completely randomly.
Pair Corralation between Pimco Global and Kensington Dynamic
Assuming the 90 days horizon Pimco Global is expected to generate 1.64 times less return on investment than Kensington Dynamic. But when comparing it to its historical volatility, Pimco Global Multi Asset is 1.85 times less risky than Kensington Dynamic. It trades about 0.19 of its potential returns per unit of risk. Kensington Dynamic Growth is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,150 in Kensington Dynamic Growth on September 12, 2024 and sell it today you would earn a total of 24.00 from holding Kensington Dynamic Growth or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pimco Global Multi Asset vs. Kensington Dynamic Growth
Performance |
| Timeline |
| Pimco Global Multi |
| Kensington Dynamic Growth |
Pimco Global and Kensington Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Global and Kensington Dynamic
The main advantage of trading using opposite Pimco Global and Kensington Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Global position performs unexpectedly, Kensington Dynamic 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 Kensington Dynamic will offset losses from the drop in Kensington Dynamic's long position.| Pimco Global vs. Virtus Multi Sector Short | Pimco Global vs. Alpine Ultra Short | Pimco Global vs. Prudential Short Duration | Pimco Global vs. Aqr Long Short Equity |
| Kensington Dynamic vs. Needham Aggressive Growth | Kensington Dynamic vs. Qs Defensive Growth | Kensington Dynamic vs. T Rowe Price | Kensington Dynamic vs. Champlain Mid Cap |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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