Correlation Between Pimco Rae and Pimco Extended
Can any of the company-specific risk be diversified away by investing in both Pimco Rae and Pimco Extended 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 Rae and Pimco Extended into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Rae Worldwide and Pimco Extended Duration, you can compare the effects of market volatilities on Pimco Rae and Pimco Extended 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 Rae with a short position of Pimco Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Rae and Pimco Extended.
Diversification Opportunities for Pimco Rae and Pimco Extended
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pimco and Pimco is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Worldwide and Pimco Extended Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Extended Duration and Pimco Rae 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 Rae Worldwide are associated (or correlated) with Pimco Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Extended Duration has no effect on the direction of Pimco Rae i.e., Pimco Rae and Pimco Extended go up and down completely randomly.
Pair Corralation between Pimco Rae and Pimco Extended
Assuming the 90 days horizon Pimco Rae Worldwide is expected to generate 0.28 times more return on investment than Pimco Extended. However, Pimco Rae Worldwide is 3.53 times less risky than Pimco Extended. It trades about 0.18 of its potential returns per unit of risk. Pimco Extended Duration is currently generating about 0.0 per unit of risk. If you would invest 807.00 in Pimco Rae Worldwide on September 15, 2024 and sell it today you would earn a total of 11.00 from holding Pimco Rae Worldwide or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Rae Worldwide vs. Pimco Extended Duration
Performance |
| Timeline |
| Pimco Rae Worldwide |
| Pimco Extended Duration |
Pimco Rae and Pimco Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Rae and Pimco Extended
The main advantage of trading using opposite Pimco Rae and Pimco Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Rae position performs unexpectedly, Pimco Extended 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 Extended will offset losses from the drop in Pimco Extended's long position.| Pimco Rae vs. Pimco Rae Worldwide | Pimco Rae vs. Pimco Rae Worldwide | Pimco Rae vs. Pimco Rae Worldwide | Pimco Rae vs. Pimco Foreign Bond |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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