Correlation Between Pimco New and Pimco Long
Can any of the company-specific risk be diversified away by investing in both Pimco New and Pimco Long 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 Pimco Long 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 Pimco Long Duration, you can compare the effects of market volatilities on Pimco New and Pimco Long 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 Pimco Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco New and Pimco Long.
Diversification Opportunities for Pimco New and Pimco Long
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pimco and Pimco is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York and Pimco Long Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Long Duration 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 Pimco Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Long Duration has no effect on the direction of Pimco New i.e., Pimco New and Pimco Long go up and down completely randomly.
Pair Corralation between Pimco New and Pimco Long
Assuming the 90 days horizon Pimco New is expected to generate 2.39 times less return on investment than Pimco Long. But when comparing it to its historical volatility, Pimco New York is 5.48 times less risky than Pimco Long. It trades about 0.36 of its potential returns per unit of risk. Pimco Long Duration is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 715.00 in Pimco Long Duration on September 13, 2024 and sell it today you would earn a total of 14.00 from holding Pimco Long Duration or generate 1.96% 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. Pimco Long Duration
Performance |
| Timeline |
| Pimco New York |
| Pimco Long Duration |
Pimco New and Pimco Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco New and Pimco Long
The main advantage of trading using opposite Pimco New and Pimco Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco New position performs unexpectedly, Pimco Long 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 Long will offset losses from the drop in Pimco Long's long position.| Pimco New vs. Pimco High Yield | Pimco New vs. Municipal Bond Fund | Pimco New vs. Pimco Floating Income | Pimco New vs. Investment Grade Porate |
| Pimco Long vs. Huber Capital Equity | Pimco Long vs. Touchstone International Equity | Pimco Long vs. Ab Select Equity | Pimco Long vs. Dodge International Stock |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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