Correlation Between Low Duration and Pimco Foreign
Can any of the company-specific risk be diversified away by investing in both Low Duration and Pimco Foreign 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 Low Duration and Pimco Foreign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Low Duration Fund and Pimco Foreign Bond, you can compare the effects of market volatilities on Low Duration and Pimco Foreign 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 Low Duration with a short position of Pimco Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Low Duration and Pimco Foreign.
Diversification Opportunities for Low Duration and Pimco Foreign
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Low and Pimco is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Low Duration Fund and Pimco Foreign Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Foreign Bond and Low Duration 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 Low Duration Fund are associated (or correlated) with Pimco Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Foreign Bond has no effect on the direction of Low Duration i.e., Low Duration and Pimco Foreign go up and down completely randomly.
Pair Corralation between Low Duration and Pimco Foreign
Assuming the 90 days horizon Low Duration Fund is not expected to generate positive returns. However, Low Duration Fund is 1.8 times less risky than Pimco Foreign. It waists most of its returns potential to compensate for thr risk taken. Pimco Foreign is generating about 0.31 per unit of risk. If you would invest 988.00 in Pimco Foreign Bond on September 1, 2024 and sell it today you would earn a total of 9.00 from holding Pimco Foreign Bond or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Low Duration Fund vs. Pimco Foreign Bond
Performance |
| Timeline |
| Low Duration |
| Pimco Foreign Bond |
Low Duration and Pimco Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Low Duration and Pimco Foreign
The main advantage of trading using opposite Low Duration and Pimco Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Low Duration position performs unexpectedly, Pimco Foreign 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 Foreign will offset losses from the drop in Pimco Foreign's long position.| Low Duration vs. Real Return Fund | Low Duration vs. Pimco Foreign Bond | Low Duration vs. Commodityrealreturn Strategy Fund | Low Duration vs. High Yield Fund |
| Pimco Foreign vs. Foreign Bond Fund | Pimco Foreign vs. Emerging Markets Bond | Pimco Foreign vs. High Yield Fund | Pimco Foreign vs. Low Duration Fund |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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