Correlation Between Pimco Rae and High Yield
Can any of the company-specific risk be diversified away by investing in both Pimco Rae and High Yield 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 High Yield 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 High Yield Fund, you can compare the effects of market volatilities on Pimco Rae and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Rae and High Yield.
Diversification Opportunities for Pimco Rae and High Yield
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pimco and High is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Worldwide and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Pimco Rae i.e., Pimco Rae and High Yield go up and down completely randomly.
Pair Corralation between Pimco Rae and High Yield
Assuming the 90 days horizon Pimco Rae Worldwide is expected to generate 2.04 times more return on investment than High Yield. However, Pimco Rae is 2.04 times more volatile than High Yield Fund. It trades about 0.33 of its potential returns per unit of risk. High Yield Fund is currently generating about 0.2 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 20.00 from holding Pimco Rae Worldwide or generate 2.46% 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. High Yield Fund
Performance |
| Timeline |
| Pimco Rae Worldwide |
| High Yield Fund |
Pimco Rae and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Rae and High Yield
The main advantage of trading using opposite Pimco Rae and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Rae position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Pimco Rae vs. Fidelity Series Government | Pimco Rae vs. Franklin Adjustable Government | Pimco Rae vs. Us Government Plus | Pimco Rae vs. Government Securities Fund |
| High Yield vs. Emerging Markets Bond | High Yield vs. Pimco Foreign Bond | High Yield vs. Real Return Fund | High Yield vs. Low Duration Fund |
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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