Correlation Between Pimco Rae and Pimco Capital
Can any of the company-specific risk be diversified away by investing in both Pimco Rae and Pimco Capital 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 Capital 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 Capital Sec, you can compare the effects of market volatilities on Pimco Rae and Pimco Capital 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 Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Rae and Pimco Capital.
Diversification Opportunities for Pimco Rae and Pimco Capital
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Pimco is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Worldwide and Pimco Capital Sec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Capital Sec 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 Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Capital Sec has no effect on the direction of Pimco Rae i.e., Pimco Rae and Pimco Capital go up and down completely randomly.
Pair Corralation between Pimco Rae and Pimco Capital
Assuming the 90 days horizon Pimco Rae Worldwide is expected to generate 2.83 times more return on investment than Pimco Capital. However, Pimco Rae is 2.83 times more volatile than Pimco Capital Sec. It trades about 0.02 of its potential returns per unit of risk. Pimco Capital Sec is currently generating about 0.03 per unit of risk. If you would invest 758.00 in Pimco Rae Worldwide on October 31, 2024 and sell it today you would earn a total of 6.00 from holding Pimco Rae Worldwide or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Rae Worldwide vs. Pimco Capital Sec
Performance |
| Timeline |
| Pimco Rae Worldwide |
| Pimco Capital Sec |
Pimco Rae and Pimco Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Rae and Pimco Capital
The main advantage of trading using opposite Pimco Rae and Pimco Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Rae position performs unexpectedly, Pimco Capital 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 Capital will offset losses from the drop in Pimco Capital's long position.| Pimco Rae vs. Wilmington Diversified Income | Pimco Rae vs. Madison Diversified Income | Pimco Rae vs. Delaware Limited Term Diversified | Pimco Rae vs. Oklahoma College Savings |
| Pimco Capital vs. Nuveen Preferred Securities | Pimco Capital vs. Cohen Steers Preferd | Pimco Capital vs. Pimco Income Fund | Pimco Capital vs. Pimco Floating Income |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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