Correlation Between Pimco Small and Guggenheim Strategic
Can any of the company-specific risk be diversified away by investing in both Pimco Small and Guggenheim Strategic 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 Small and Guggenheim Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Small Cap and Guggenheim Strategic Opportunities, you can compare the effects of market volatilities on Pimco Small and Guggenheim Strategic 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 Small with a short position of Guggenheim Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Small and Guggenheim Strategic.
Diversification Opportunities for Pimco Small and Guggenheim Strategic
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Guggenheim is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Small Cap and Guggenheim Strategic Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Strategic and Pimco Small 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 Small Cap are associated (or correlated) with Guggenheim Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Strategic has no effect on the direction of Pimco Small i.e., Pimco Small and Guggenheim Strategic go up and down completely randomly.
Pair Corralation between Pimco Small and Guggenheim Strategic
Assuming the 90 days horizon Pimco Small Cap is expected to generate 3.98 times more return on investment than Guggenheim Strategic. However, Pimco Small is 3.98 times more volatile than Guggenheim Strategic Opportunities. It trades about 0.23 of its potential returns per unit of risk. Guggenheim Strategic Opportunities is currently generating about 0.25 per unit of risk. If you would invest 790.00 in Pimco Small Cap on August 25, 2024 and sell it today you would earn a total of 68.00 from holding Pimco Small Cap or generate 8.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Small Cap vs. Guggenheim Strategic Opportuni
Performance |
| Timeline |
| Pimco Small Cap |
| Guggenheim Strategic |
Pimco Small and Guggenheim Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Small and Guggenheim Strategic
The main advantage of trading using opposite Pimco Small and Guggenheim Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Small position performs unexpectedly, Guggenheim Strategic 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 Guggenheim Strategic will offset losses from the drop in Guggenheim Strategic's long position.| Pimco Small vs. Pimco International Stocksplus | Pimco Small vs. Fundamental Indexplus Tr | Pimco Small vs. Stocksplus Total Return | Pimco Small vs. Blackrock Equity Dividend |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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