Correlation Between Pimco Emerging and Foreign Bond
Can any of the company-specific risk be diversified away by investing in both Pimco Emerging and Foreign Bond 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 Emerging and Foreign Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Emerging Markets and Foreign Bond Fund, you can compare the effects of market volatilities on Pimco Emerging and Foreign Bond 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 Emerging with a short position of Foreign Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Emerging and Foreign Bond.
Diversification Opportunities for Pimco Emerging and Foreign Bond
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and Foreign is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Emerging Markets and Foreign Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Bond and Pimco Emerging 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 Emerging Markets are associated (or correlated) with Foreign Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Bond has no effect on the direction of Pimco Emerging i.e., Pimco Emerging and Foreign Bond go up and down completely randomly.
Pair Corralation between Pimco Emerging and Foreign Bond
Assuming the 90 days horizon Pimco Emerging Markets is expected to under-perform the Foreign Bond. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Emerging Markets is 1.29 times less risky than Foreign Bond. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Foreign Bond Fund is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 759.00 in Foreign Bond Fund on September 1, 2024 and sell it today you would lose (1.00) from holding Foreign Bond Fund or give up 0.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Emerging Markets vs. Foreign Bond Fund
Performance |
| Timeline |
| Pimco Emerging Markets |
| Foreign Bond |
Pimco Emerging and Foreign Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Emerging and Foreign Bond
The main advantage of trading using opposite Pimco Emerging and Foreign Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Emerging position performs unexpectedly, Foreign Bond 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 Foreign Bond will offset losses from the drop in Foreign Bond's long position.| Pimco Emerging vs. Pimco Rae Worldwide | Pimco Emerging vs. Pimco Rae Worldwide | Pimco Emerging vs. Pimco Rae Worldwide | Pimco Emerging vs. Pimco Rae Worldwide |
| Foreign Bond vs. Pimco Unconstrained Bond | Foreign Bond vs. Pimco Global Multi Asset | Foreign Bond vs. Pimco All Asset | Foreign Bond vs. Pimco Emerging Markets |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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