Correlation Between New York and Pimco Rae
Can any of the company-specific risk be diversified away by investing in both New York 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 New York and Pimco Rae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New York Municipal and Pimco Rae Worldwide, you can compare the effects of market volatilities on New York 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 New York with a short position of Pimco Rae. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and Pimco Rae.
Diversification Opportunities for New York and Pimco Rae
Weak diversification
The 3 months correlation between New and Pimco is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding New York Municipal 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 New York 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 New York Municipal 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 New York i.e., New York and Pimco Rae go up and down completely randomly.
Pair Corralation between New York and Pimco Rae
Assuming the 90 days horizon New York is expected to generate 2.09 times less return on investment than Pimco Rae. But when comparing it to its historical volatility, New York Municipal is 1.84 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 0.09 of returns per unit of risk over similar time horizon. If you would invest 691.00 in Pimco Rae Worldwide on August 31, 2024 and sell it today you would earn a total of 141.00 from holding Pimco Rae Worldwide or generate 20.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New York Municipal vs. Pimco Rae Worldwide
Performance |
| Timeline |
| New York Municipal |
| Pimco Rae Worldwide |
New York and Pimco Rae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New York and Pimco Rae
The main advantage of trading using opposite New York and Pimco Rae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York 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.| New York vs. Pimco High Yield | New York vs. Municipal Bond Fund | New York vs. Pimco Floating Income | New York vs. Investment Grade Porate |
| Pimco Rae vs. Growth Strategy Fund | Pimco Rae vs. Goldman Sachs Emerging | Pimco Rae vs. Calvert Emerging Markets | Pimco Rae vs. Transamerica 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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