Correlation Between Pimco Total and American Funds
Can any of the company-specific risk be diversified away by investing in both Pimco Total and American Funds 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 Total and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Total Return and American Funds Strategic, you can compare the effects of market volatilities on Pimco Total and American Funds 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 Total with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Total and American Funds.
Diversification Opportunities for Pimco Total and American Funds
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pimco and American is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Total Return and American Funds Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Strategic and Pimco Total 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 Total Return are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Strategic has no effect on the direction of Pimco Total i.e., Pimco Total and American Funds go up and down completely randomly.
Pair Corralation between Pimco Total and American Funds
Assuming the 90 days horizon Pimco Total Return is expected to generate 1.03 times more return on investment than American Funds. However, Pimco Total is 1.03 times more volatile than American Funds Strategic. It trades about 0.16 of its potential returns per unit of risk. American Funds Strategic is currently generating about 0.0 per unit of risk. If you would invest 856.00 in Pimco Total Return on September 4, 2024 and sell it today you would earn a total of 10.00 from holding Pimco Total Return or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Total Return vs. American Funds Strategic
Performance |
| Timeline |
| Pimco Total Return |
| American Funds Strategic |
Pimco Total and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Total and American Funds
The main advantage of trading using opposite Pimco Total and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Total position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Pimco Total vs. Gamco Global Gold | Pimco Total vs. Franklin Gold Precious | Pimco Total vs. Goldman Sachs Short | Pimco Total vs. Goldman Sachs Clean |
| American Funds vs. American Funds Inflation | American Funds vs. Bond Fund Of | American Funds vs. Us Government Securities | American Funds vs. Baron Global Advantage |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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