Correlation Between Pace Municipal and Pimco Rae
Can any of the company-specific risk be diversified away by investing in both Pace Municipal and Pimco Rae 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 Rae 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 Rae Worldwide, you can compare the effects of market volatilities on Pace Municipal and Pimco Rae 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 Rae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Municipal and Pimco Rae.
Diversification Opportunities for Pace Municipal and Pimco Rae
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PACE and Pimco is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pace Municipal Fixed and Pimco Rae Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Rae Worldwide 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 Rae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Rae Worldwide has no effect on the direction of Pace Municipal i.e., Pace Municipal and Pimco Rae go up and down completely randomly.
Pair Corralation between Pace Municipal and Pimco Rae
Assuming the 90 days horizon Pace Municipal is expected to generate 1.8 times less return on investment than Pimco Rae. But when comparing it to its historical volatility, Pace Municipal Fixed is 1.16 times less risky than Pimco Rae. It trades about 0.08 of its potential returns per unit of risk. Pimco Rae Worldwide is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 808.00 in Pimco Rae Worldwide on August 26, 2024 and sell it today you would earn a total of 6.00 from holding Pimco Rae Worldwide or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Municipal Fixed vs. Pimco Rae Worldwide
Performance |
| Timeline |
| Pace Municipal Fixed |
| Pimco Rae Worldwide |
Pace Municipal and Pimco Rae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Municipal and Pimco Rae
The main advantage of trading using opposite Pace Municipal and Pimco Rae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Municipal position performs unexpectedly, Pimco Rae 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 Rae will offset losses from the drop in Pimco Rae's long position.| Pace Municipal vs. Scharf Fund Retail | Pace Municipal vs. The Hartford Equity | Pace Municipal vs. Small Cap Equity | Pace Municipal vs. Touchstone International Equity |
| Pimco Rae vs. Nuveen Minnesota Municipal | Pimco Rae vs. Counterpoint Tactical Municipal | Pimco Rae vs. Pace Municipal Fixed | Pimco Rae 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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