Correlation Between Pimco Rae and Fixed Income
Can any of the company-specific risk be diversified away by investing in both Pimco Rae and Fixed Income 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 Fixed Income 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 Fixed Income Shares, you can compare the effects of market volatilities on Pimco Rae and Fixed Income 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 Fixed Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Rae and Fixed Income.
Diversification Opportunities for Pimco Rae and Fixed Income
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pimco and Fixed is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Worldwide and Fixed Income Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fixed Income Shares 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 Fixed Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fixed Income Shares has no effect on the direction of Pimco Rae i.e., Pimco Rae and Fixed Income go up and down completely randomly.
Pair Corralation between Pimco Rae and Fixed Income
Assuming the 90 days horizon Pimco Rae Worldwide is expected to generate 0.86 times more return on investment than Fixed Income. However, Pimco Rae Worldwide is 1.16 times less risky than Fixed Income. It trades about 0.34 of its potential returns per unit of risk. Fixed Income Shares is currently generating about 0.21 per unit of risk. If you would invest 805.00 in Pimco Rae Worldwide on September 2, 2024 and sell it today you would earn a total of 20.00 from holding Pimco Rae Worldwide or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Rae Worldwide vs. Fixed Income Shares
Performance |
| Timeline |
| Pimco Rae Worldwide |
| Fixed Income Shares |
Pimco Rae and Fixed Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Rae and Fixed Income
The main advantage of trading using opposite Pimco Rae and Fixed Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Rae position performs unexpectedly, Fixed Income 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 Fixed Income will offset losses from the drop in Fixed Income's long position.| Pimco Rae vs. Inflation Protected Bond Fund | Pimco Rae vs. Ab Bond Inflation | Pimco Rae vs. Calamos Dynamic Convertible | Pimco Rae vs. Ultra Short Fixed Income |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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