Correlation Between PIMCO Sterling and PIMCO Dollar
Can any of the company-specific risk be diversified away by investing in both PIMCO Sterling and PIMCO Dollar 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 Sterling and PIMCO Dollar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO Sterling Short and PIMCO Dollar Short, you can compare the effects of market volatilities on PIMCO Sterling and PIMCO Dollar 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 Sterling with a short position of PIMCO Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Sterling and PIMCO Dollar.
Diversification Opportunities for PIMCO Sterling and PIMCO Dollar
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between PIMCO and PIMCO is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Sterling Short and PIMCO Dollar Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Dollar Short and PIMCO Sterling 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 Sterling Short are associated (or correlated) with PIMCO Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Dollar Short has no effect on the direction of PIMCO Sterling i.e., PIMCO Sterling and PIMCO Dollar go up and down completely randomly.
Pair Corralation between PIMCO Sterling and PIMCO Dollar
Assuming the 90 days trading horizon PIMCO Sterling is expected to generate 1.07 times less return on investment than PIMCO Dollar. In addition to that, PIMCO Sterling is 1.01 times more volatile than PIMCO Dollar Short. It trades about 0.61 of its total potential returns per unit of risk. PIMCO Dollar Short is currently generating about 0.66 per unit of volatility. If you would invest 10,922 in PIMCO Dollar Short on August 30, 2024 and sell it today you would earn a total of 48.00 from holding PIMCO Dollar Short or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO Sterling Short vs. PIMCO Dollar Short
Performance |
| Timeline |
| PIMCO Sterling Short |
| PIMCO Dollar Short |
PIMCO Sterling and PIMCO Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Sterling and PIMCO Dollar
The main advantage of trading using opposite PIMCO Sterling and PIMCO Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Sterling position performs unexpectedly, PIMCO Dollar 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 Dollar will offset losses from the drop in PIMCO Dollar's long position.| PIMCO Sterling vs. PIMCO Dollar Short | PIMCO Sterling vs. PIMCO Low Duration | PIMCO Sterling vs. PIMCO ETFs plc | PIMCO Sterling vs. PIMCO Short Term High |
| PIMCO Dollar vs. Leverage Shares 3x | PIMCO Dollar vs. Leverage Shares 3x | PIMCO Dollar vs. GraniteShares 3x Short | PIMCO Dollar vs. Leverage Shares 3x |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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