Correlation Between High Yield and Pimco Foreign
Can any of the company-specific risk be diversified away by investing in both High Yield and Pimco Foreign 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 High Yield and Pimco Foreign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Fund and Pimco Foreign Bond, you can compare the effects of market volatilities on High Yield and Pimco Foreign 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 High Yield with a short position of Pimco Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and Pimco Foreign.
Diversification Opportunities for High Yield and Pimco Foreign
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between High and Pimco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund and Pimco Foreign Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Foreign Bond and High Yield 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 High Yield Fund are associated (or correlated) with Pimco Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Foreign Bond has no effect on the direction of High Yield i.e., High Yield and Pimco Foreign go up and down completely randomly.
Pair Corralation between High Yield and Pimco Foreign
Assuming the 90 days horizon High Yield is expected to generate 3.6 times less return on investment than Pimco Foreign. But when comparing it to its historical volatility, High Yield Fund is 1.02 times less risky than Pimco Foreign. It trades about 0.11 of its potential returns per unit of risk. Pimco Foreign Bond is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 988.00 in Pimco Foreign Bond on September 1, 2024 and sell it today you would earn a total of 14.00 from holding Pimco Foreign Bond or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
High Yield Fund vs. Pimco Foreign Bond
Performance |
| Timeline |
| High Yield Fund |
| Pimco Foreign Bond |
High Yield and Pimco Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and Pimco Foreign
The main advantage of trading using opposite High Yield and Pimco Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, Pimco Foreign 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 Foreign will offset losses from the drop in Pimco Foreign's long position.| High Yield vs. Legg Mason Partners | High Yield vs. Champlain Mid Cap | High Yield vs. L Abbett Growth | High Yield vs. Chase Growth Fund |
| Pimco Foreign vs. Foreign Bond Fund | Pimco Foreign vs. Emerging Markets Bond | Pimco Foreign vs. High Yield Fund | Pimco Foreign vs. Low Duration Fund |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |