Correlation Between Pimco Rae and Investment Grade
Can any of the company-specific risk be diversified away by investing in both Pimco Rae and Investment Grade 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 Investment Grade 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 Investment Grade Porate, you can compare the effects of market volatilities on Pimco Rae and Investment Grade 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 Investment Grade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Rae and Investment Grade.
Diversification Opportunities for Pimco Rae and Investment Grade
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pimco and Investment is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Plus and Investment Grade Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Grade Porate 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 Investment Grade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Grade Porate has no effect on the direction of Pimco Rae i.e., Pimco Rae and Investment Grade go up and down completely randomly.
Pair Corralation between Pimco Rae and Investment Grade
Assuming the 90 days horizon Pimco Rae Plus is expected to generate 2.46 times more return on investment than Investment Grade. However, Pimco Rae is 2.46 times more volatile than Investment Grade Porate. It trades about 0.23 of its potential returns per unit of risk. Investment Grade Porate is currently generating about 0.09 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Rae Plus vs. Investment Grade Porate
Performance |
| Timeline |
| Pimco Rae Plus |
| Investment Grade Porate |
Pimco Rae and Investment Grade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Rae and Investment Grade
The main advantage of trading using opposite Pimco Rae and Investment Grade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Rae position performs unexpectedly, Investment Grade 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 Investment Grade will offset losses from the drop in Investment Grade'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 |
| Investment Grade vs. Investment Of America | Investment Grade vs. Investment Grade Bond | Investment Grade vs. Investment Grade Bond | Investment Grade vs. Investment Grade Bond |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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