Correlation Between Pimco High and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Pimco High and Emerging Markets 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 High and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco High Yield and Emerging Markets Bond, you can compare the effects of market volatilities on Pimco High and Emerging Markets 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 High with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco High and Emerging Markets.
Diversification Opportunities for Pimco High and Emerging Markets
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PIMCO and Emerging is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Pimco High Yield and Emerging Markets Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Bond and Pimco High 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 High Yield are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Bond has no effect on the direction of Pimco High i.e., Pimco High and Emerging Markets go up and down completely randomly.
Pair Corralation between Pimco High and Emerging Markets
Assuming the 90 days horizon Pimco High Yield is expected to generate 0.75 times more return on investment than Emerging Markets. However, Pimco High Yield is 1.33 times less risky than Emerging Markets. It trades about 0.14 of its potential returns per unit of risk. Emerging Markets Bond is currently generating about 0.09 per unit of risk. If you would invest 754.00 in Pimco High Yield on August 30, 2024 and sell it today you would earn a total of 170.00 from holding Pimco High Yield or generate 22.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco High Yield vs. Emerging Markets Bond
Performance |
| Timeline |
| Pimco High Yield |
| Emerging Markets Bond |
Pimco High and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco High and Emerging Markets
The main advantage of trading using opposite Pimco High and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco High position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Pimco High vs. Prudential High Yield | Pimco High vs. HUMANA INC | Pimco High vs. Aquagold International | Pimco High vs. Barloworld Ltd ADR |
| Emerging Markets vs. Pimco High Yield | Emerging Markets vs. Prudential High Yield | Emerging Markets vs. Blackrock High Yield | Emerging Markets vs. Tiaa Cref High Yield 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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