Correlation Between Pimco New and European Equity
Can any of the company-specific risk be diversified away by investing in both Pimco New and European Equity 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 New and European Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco New York and European Equity Closed, you can compare the effects of market volatilities on Pimco New and European Equity 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 New with a short position of European Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco New and European Equity.
Diversification Opportunities for Pimco New and European Equity
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pimco and European is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York and European Equity Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Equity Closed and Pimco New 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 New York are associated (or correlated) with European Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Equity Closed has no effect on the direction of Pimco New i.e., Pimco New and European Equity go up and down completely randomly.
Pair Corralation between Pimco New and European Equity
Considering the 90-day investment horizon Pimco New York is expected to generate 0.54 times more return on investment than European Equity. However, Pimco New York is 1.86 times less risky than European Equity. It trades about 0.03 of its potential returns per unit of risk. European Equity Closed is currently generating about -0.24 per unit of risk. If you would invest 797.00 in Pimco New York on August 31, 2024 and sell it today you would earn a total of 2.00 from holding Pimco New York or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco New York vs. European Equity Closed
Performance |
| Timeline |
| Pimco New York |
| European Equity Closed |
Pimco New and European Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco New and European Equity
The main advantage of trading using opposite Pimco New and European Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco New position performs unexpectedly, European Equity 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 European Equity will offset losses from the drop in European Equity's long position.| Pimco New vs. Invesco Pennsylvania Value | Pimco New vs. Blackrock Muniholdings Ny | Pimco New vs. Eaton Vance National | Pimco New vs. Nuveen New York |
| European Equity vs. XAI Octagon Floating | European Equity vs. MFS Charter Income | European Equity vs. Nuveen New York | European Equity vs. Invesco High Income |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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