Correlation Between Pimco Rae and Foreign Bond
Can any of the company-specific risk be diversified away by investing in both Pimco Rae and Foreign Bond 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 Foreign Bond 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 Foreign Bond Fund, you can compare the effects of market volatilities on Pimco Rae and Foreign Bond 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 Foreign Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Rae and Foreign Bond.
Diversification Opportunities for Pimco Rae and Foreign Bond
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pimco and Foreign is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Worldwide and Foreign Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Bond 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 Foreign Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Bond has no effect on the direction of Pimco Rae i.e., Pimco Rae and Foreign Bond go up and down completely randomly.
Pair Corralation between Pimco Rae and Foreign Bond
Assuming the 90 days horizon Pimco Rae Worldwide is expected to generate 0.72 times more return on investment than Foreign Bond. However, Pimco Rae Worldwide is 1.39 times less risky than Foreign Bond. It trades about 0.3 of its potential returns per unit of risk. Foreign Bond Fund is currently generating about -0.05 per unit of risk. If you would invest 806.00 in Pimco Rae Worldwide on August 30, 2024 and sell it today you would earn a total of 19.00 from holding Pimco Rae Worldwide or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pimco Rae Worldwide vs. Foreign Bond Fund
Performance |
| Timeline |
| Pimco Rae Worldwide |
| Foreign Bond |
Pimco Rae and Foreign Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Rae and Foreign Bond
The main advantage of trading using opposite Pimco Rae and Foreign Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Rae position performs unexpectedly, Foreign Bond 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 Foreign Bond will offset losses from the drop in Foreign Bond's long position.| Pimco Rae vs. Blrc Sgy Mnp | Pimco Rae vs. Ms Global Fixed | Pimco Rae vs. Ultra Short Fixed Income | Pimco Rae vs. Versatile Bond Portfolio |
| Foreign Bond vs. Deutsche Health And | Foreign Bond vs. Health Biotchnology Portfolio | Foreign Bond vs. Invesco Global Health | Foreign Bond vs. Fidelity Advisor Health |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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