Correlation Between Smallcap Growth and Pimco Extended
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Pimco Extended 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 Smallcap Growth and Pimco Extended into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Pimco Extended Duration, you can compare the effects of market volatilities on Smallcap Growth and Pimco Extended 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 Smallcap Growth with a short position of Pimco Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Pimco Extended.
Diversification Opportunities for Smallcap Growth and Pimco Extended
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Smallcap and Pimco is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Pimco Extended Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Extended Duration and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Pimco Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Extended Duration has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Pimco Extended go up and down completely randomly.
Pair Corralation between Smallcap Growth and Pimco Extended
Assuming the 90 days horizon Smallcap Growth is expected to generate 5.64 times less return on investment than Pimco Extended. But when comparing it to its historical volatility, Smallcap Growth Fund is 11.38 times less risky than Pimco Extended. It trades about 0.06 of its potential returns per unit of risk. Pimco Extended Duration is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,518 in Pimco Extended Duration on September 13, 2024 and sell it today you would lose (171.00) from holding Pimco Extended Duration or give up 11.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Pimco Extended Duration
Performance |
| Timeline |
| Smallcap Growth |
| Pimco Extended Duration |
Smallcap Growth and Pimco Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Pimco Extended
The main advantage of trading using opposite Smallcap Growth and Pimco Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Pimco Extended 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 Extended will offset losses from the drop in Pimco Extended's long position.| Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management | Smallcap Growth vs. Strategic Asset Management |
| Pimco Extended vs. Dodge Cox Stock | Pimco Extended vs. T Rowe Price | Pimco Extended vs. Guidemark Large Cap | Pimco Extended 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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