Correlation Between Pimco Rae and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Pimco Rae and Emerging Markets 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 Emerging Markets 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 Emerging Markets Bond, you can compare the effects of market volatilities on Pimco Rae and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Rae and Emerging Markets.
Diversification Opportunities for Pimco Rae and Emerging Markets
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pimco and Emerging is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Worldwide and Emerging Markets Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Bond has no effect on the direction of Pimco Rae i.e., Pimco Rae and Emerging Markets go up and down completely randomly.
Pair Corralation between Pimco Rae and Emerging Markets
Assuming the 90 days horizon Pimco Rae Worldwide is expected to generate 1.07 times more return on investment than Emerging Markets. However, Pimco Rae is 1.07 times more volatile than Emerging Markets Bond. It trades about 0.29 of its potential returns per unit of risk. Emerging Markets Bond is currently generating about 0.15 per unit of risk. If you would invest 814.00 in Pimco Rae Worldwide on August 30, 2024 and sell it today you would earn a total of 18.00 from holding Pimco Rae Worldwide or generate 2.21% 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. Emerging Markets Bond
Performance |
| Timeline |
| Pimco Rae Worldwide |
| Emerging Markets Bond |
Pimco Rae and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Rae and Emerging Markets
The main advantage of trading using opposite Pimco Rae and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Rae position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Pimco Rae vs. Tax Managed Large Cap | Pimco Rae vs. Fundamental Large Cap | Pimco Rae vs. Strategic Allocation Aggressive | Pimco Rae vs. Pace Large Growth |
| Emerging Markets vs. Astor Longshort Fund | Emerging Markets vs. Barings Active Short | Emerging Markets vs. Vanguard Short Term Federal | Emerging Markets vs. Aqr Long Short Equity |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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