Correlation Between Pimco Small and Knife River
Can any of the company-specific risk be diversified away by investing in both Pimco Small and Knife River 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 Knife River 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 Knife River, you can compare the effects of market volatilities on Pimco Small and Knife River 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 Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Small and Knife River.
Diversification Opportunities for Pimco Small and Knife River
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pimco and Knife is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Small Cap and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River 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 Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of Pimco Small i.e., Pimco Small and Knife River go up and down completely randomly.
Pair Corralation between Pimco Small and Knife River
Assuming the 90 days horizon Pimco Small is expected to generate 2.18 times less return on investment than Knife River. But when comparing it to its historical volatility, Pimco Small Cap is 1.85 times less risky than Knife River. It trades about 0.07 of its potential returns per unit of risk. Knife River is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,345 in Knife River on October 25, 2024 and sell it today you would earn a total of 1,022 from holding Knife River or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Small Cap vs. Knife River
Performance |
| Timeline |
| Pimco Small Cap |
| Knife River |
Pimco Small and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Small and Knife River
The main advantage of trading using opposite Pimco Small and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Small position performs unexpectedly, Knife River 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 Knife River will offset losses from the drop in Knife River's long position.| Pimco Small vs. Pimco International Stocksplus | Pimco Small vs. Fundamental Indexplus Tr | Pimco Small vs. Stocksplus Total Return | Pimco Small vs. Pimco Stocksplus Long |
| Knife River vs. Hooker Furniture | Knife River vs. Norfolk Southern | Knife River vs. Coty Inc | Knife River vs. Academy Sports Outdoors |
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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