Correlation Between Pimco Rae and Pimco Dynamic
Can any of the company-specific risk be diversified away by investing in both Pimco Rae and Pimco Dynamic 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 Dynamic 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 Pimco Dynamic Bond, you can compare the effects of market volatilities on Pimco Rae and Pimco Dynamic 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 Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Rae and Pimco Dynamic.
Diversification Opportunities for Pimco Rae and Pimco Dynamic
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and Pimco is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Plus and Pimco Dynamic Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Dynamic 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 Plus are associated (or correlated) with Pimco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Dynamic Bond has no effect on the direction of Pimco Rae i.e., Pimco Rae and Pimco Dynamic go up and down completely randomly.
Pair Corralation between Pimco Rae and Pimco Dynamic
Assuming the 90 days horizon Pimco Rae Plus is expected to generate 6.5 times more return on investment than Pimco Dynamic. However, Pimco Rae is 6.5 times more volatile than Pimco Dynamic Bond. It trades about 0.23 of its potential returns per unit of risk. Pimco Dynamic Bond is currently generating about 0.27 per unit of risk. If you would invest 1,932 in Pimco Rae Plus on August 31, 2024 and sell it today you would earn a total of 94.00 from holding Pimco Rae Plus or generate 4.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Rae Plus vs. Pimco Dynamic Bond
Performance |
| Timeline |
| Pimco Rae Plus |
| Pimco Dynamic Bond |
Pimco Rae and Pimco Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Rae and Pimco Dynamic
The main advantage of trading using opposite Pimco Rae and Pimco Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Rae position performs unexpectedly, Pimco Dynamic 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 Dynamic will offset losses from the drop in Pimco Dynamic'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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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