Correlation Between College Retirement and Pimco International
Can any of the company-specific risk be diversified away by investing in both College Retirement and Pimco International 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 College Retirement and Pimco International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between College Retirement Equities and Pimco International Bond, you can compare the effects of market volatilities on College Retirement and Pimco International 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 College Retirement with a short position of Pimco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of College Retirement and Pimco International.
Diversification Opportunities for College Retirement and Pimco International
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between College and Pimco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding College Retirement Equities and Pimco International Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco International Bond and College Retirement 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 College Retirement Equities are associated (or correlated) with Pimco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco International Bond has no effect on the direction of College Retirement i.e., College Retirement and Pimco International go up and down completely randomly.
Pair Corralation between College Retirement and Pimco International
Assuming the 90 days trading horizon College Retirement Equities is expected to generate 3.95 times more return on investment than Pimco International. However, College Retirement is 3.95 times more volatile than Pimco International Bond. It trades about 0.23 of its potential returns per unit of risk. Pimco International Bond is currently generating about 0.02 per unit of risk. If you would invest 33,930 in College Retirement Equities on November 3, 2024 and sell it today you would earn a total of 1,323 from holding College Retirement Equities or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
College Retirement Equities vs. Pimco International Bond
Performance |
| Timeline |
| College Retirement |
| Pimco International Bond |
College Retirement and Pimco International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with College Retirement and Pimco International
The main advantage of trading using opposite College Retirement and Pimco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if College Retirement position performs unexpectedly, Pimco International 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 International will offset losses from the drop in Pimco International's long position.| College Retirement vs. Fznopx | College Retirement vs. Fwnhtx | College Retirement vs. Fabwx | College Retirement vs. Flakqx |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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