Correlation Between Pace Municipal and Pimco Foreign
Can any of the company-specific risk be diversified away by investing in both Pace Municipal 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 Pace Municipal and Pimco Foreign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Municipal Fixed and Pimco Foreign Bond, you can compare the effects of market volatilities on Pace Municipal 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 Pace Municipal with a short position of Pimco Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Pimco Foreign.
Diversification Opportunities for Pace Municipal and Pimco Foreign
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pace and Pimco is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed 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 Pace Municipal 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 Pace Municipal Fixed 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 Pace Municipal i.e., Pace Municipal and Pimco Foreign go up and down completely randomly.
Pair Corralation between Pace Municipal and Pimco Foreign
Assuming the 90 days horizon Pace Municipal Fixed is expected to generate 0.39 times more return on investment than Pimco Foreign. However, Pace Municipal Fixed is 2.56 times less risky than Pimco Foreign. It trades about 0.07 of its potential returns per unit of risk. Pimco Foreign Bond is currently generating about 0.02 per unit of risk. If you would invest 1,151 in Pace Municipal Fixed on August 29, 2024 and sell it today you would earn a total of 69.00 from holding Pace Municipal Fixed or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Pace Municipal Fixed vs. Pimco Foreign Bond
Performance |
| Timeline |
| Pace Municipal Fixed |
| Pimco Foreign Bond |
Pace Municipal and Pimco Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Municipal and Pimco Foreign
The main advantage of trading using opposite Pace Municipal and Pimco Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Municipal 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.| Pace Municipal vs. Legg Mason Partners | Pace Municipal vs. Artisan Emerging Markets | Pace Municipal vs. Touchstone Sands Capital | Pace Municipal vs. T Rowe Price |
| Pimco Foreign vs. Fidelity Advisor Gold | Pimco Foreign vs. The Gold Bullion | Pimco Foreign vs. Short Precious Metals | Pimco Foreign vs. Oppenheimer Gold Special |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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