Correlation Between Real Return and Pimco Rae
Can any of the company-specific risk be diversified away by investing in both Real Return 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 Real Return and Pimco Rae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Real Return Fund and Pimco Rae Worldwide, you can compare the effects of market volatilities on Real Return 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 Real Return with a short position of Pimco Rae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Return and Pimco Rae.
Diversification Opportunities for Real Return and Pimco Rae
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Real and Pimco is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Real Return Fund 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 Real Return 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 Real Return Fund 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 Real Return i.e., Real Return and Pimco Rae go up and down completely randomly.
Pair Corralation between Real Return and Pimco Rae
Assuming the 90 days horizon Real Return is expected to generate 2.29 times less return on investment than Pimco Rae. But when comparing it to its historical volatility, Real Return Fund is 1.31 times less risky than Pimco Rae. It trades about 0.07 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 693.00 in Pimco Rae Worldwide on September 12, 2024 and sell it today you would earn a total of 126.00 from holding Pimco Rae Worldwide or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Real Return Fund vs. Pimco Rae Worldwide
Performance |
| Timeline |
| Real Return Fund |
| Pimco Rae Worldwide |
Real Return and Pimco Rae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Return and Pimco Rae
The main advantage of trading using opposite Real Return and Pimco Rae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Return 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.| Real Return vs. Vanguard Inflation Protected Securities | Real Return vs. Vanguard Inflation Protected Securities | Real Return vs. American Funds Inflation | Real Return vs. American Funds Inflation |
| Pimco Rae vs. Kinetics Global Fund | Pimco Rae vs. 361 Global Longshort | Pimco Rae vs. Ab Global Risk | Pimco Rae vs. Artisan Global Unconstrained |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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