Correlation Between Pimco Mortgage and Pimco Preferred
Can any of the company-specific risk be diversified away by investing in both Pimco Mortgage and Pimco Preferred 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 Mortgage and Pimco Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Mortgage Opportunities and Pimco Preferred And, you can compare the effects of market volatilities on Pimco Mortgage and Pimco Preferred 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 Mortgage with a short position of Pimco Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Mortgage and Pimco Preferred.
Diversification Opportunities for Pimco Mortgage and Pimco Preferred
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pimco and Pimco is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Mortgage Opportunities and Pimco Preferred And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Preferred And and Pimco Mortgage 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 Mortgage Opportunities are associated (or correlated) with Pimco Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Preferred And has no effect on the direction of Pimco Mortgage i.e., Pimco Mortgage and Pimco Preferred go up and down completely randomly.
Pair Corralation between Pimco Mortgage and Pimco Preferred
Assuming the 90 days horizon Pimco Mortgage is expected to generate 1.75 times less return on investment than Pimco Preferred. In addition to that, Pimco Mortgage is 1.35 times more volatile than Pimco Preferred And. It trades about 0.12 of its total potential returns per unit of risk. Pimco Preferred And is currently generating about 0.27 per unit of volatility. If you would invest 821.00 in Pimco Preferred And on August 29, 2024 and sell it today you would earn a total of 109.00 from holding Pimco Preferred And or generate 13.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Pimco Mortgage Opportunities vs. Pimco Preferred And
Performance |
| Timeline |
| Pimco Mortgage Oppor |
| Pimco Preferred And |
Pimco Mortgage and Pimco Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Mortgage and Pimco Preferred
The main advantage of trading using opposite Pimco Mortgage and Pimco Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Mortgage position performs unexpectedly, Pimco Preferred 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 Preferred will offset losses from the drop in Pimco Preferred's long position.| Pimco Mortgage vs. Aqr Long Short Equity | Pimco Mortgage vs. Franklin Federal Limited Term | Pimco Mortgage vs. Old Westbury Short Term | Pimco Mortgage vs. Rbc Ultra Short Fixed |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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