Correlation Between Pimco Rae and Long-term
Can any of the company-specific risk be diversified away by investing in both Pimco Rae and Long-term 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 Long-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Rae Plus and Long Term Government Fund, you can compare the effects of market volatilities on Pimco Rae and Long-term 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 Long-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Rae and Long-term.
Diversification Opportunities for Pimco Rae and Long-term
Excellent diversification
The 3 months correlation between Pimco and Long-term is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Plus and Long Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Term Government 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 Plus are associated (or correlated) with Long-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Term Government has no effect on the direction of Pimco Rae i.e., Pimco Rae and Long-term go up and down completely randomly.
Pair Corralation between Pimco Rae and Long-term
Assuming the 90 days horizon Pimco Rae is expected to generate 5.66 times less return on investment than Long-term. But when comparing it to its historical volatility, Pimco Rae Plus is 16.26 times less risky than Long-term. It trades about 0.09 of its potential returns per unit of risk. Long Term Government Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,513 in Long Term Government Fund on August 31, 2024 and sell it today you would lose (74.00) from holding Long Term Government Fund or give up 4.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Rae Plus vs. Long Term Government Fund
Performance |
| Timeline |
| Pimco Rae Plus |
| Long Term Government |
Pimco Rae and Long-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Rae and Long-term
The main advantage of trading using opposite Pimco Rae and Long-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Rae position performs unexpectedly, Long-term 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 Long-term will offset losses from the drop in Long-term's long position.| Pimco Rae vs. Us Government Plus | Pimco Rae vs. Goldman Sachs Government | Pimco Rae vs. Virtus Seix Government | Pimco Rae vs. Dunham Porategovernment Bond |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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