Correlation Between PIMCO Sterling and PIMCO Short
Can any of the company-specific risk be diversified away by investing in both PIMCO Sterling and PIMCO Short 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 Short 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 Short Term High, you can compare the effects of market volatilities on PIMCO Sterling and PIMCO Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Sterling and PIMCO Short.
Diversification Opportunities for PIMCO Sterling and PIMCO Short
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 Sterling Short and PIMCO Short Term High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Short Term 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Short Term has no effect on the direction of PIMCO Sterling i.e., PIMCO Sterling and PIMCO Short go up and down completely randomly.
Pair Corralation between PIMCO Sterling and PIMCO Short
Assuming the 90 days trading horizon PIMCO Sterling is expected to generate 1.81 times less return on investment than PIMCO Short. But when comparing it to its historical volatility, PIMCO Sterling Short is 8.17 times less risky than PIMCO Short. It trades about 0.55 of its potential returns per unit of risk. PIMCO Short Term High is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 12,998 in PIMCO Short Term High on September 4, 2024 and sell it today you would earn a total of 2,515 from holding PIMCO Short Term High or generate 19.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO Sterling Short vs. PIMCO Short Term High
Performance |
| Timeline |
| PIMCO Sterling Short |
| PIMCO Short Term |
PIMCO Sterling and PIMCO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Sterling and PIMCO Short
The main advantage of trading using opposite PIMCO Sterling and PIMCO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Sterling position performs unexpectedly, PIMCO Short 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 Short will offset losses from the drop in PIMCO Short's long position.| PIMCO Sterling vs. Leverage Shares 3x | PIMCO Sterling vs. WisdomTree Natural Gas | PIMCO Sterling vs. SP 500 VIX | PIMCO Sterling vs. Leverage Shares 3x |
| PIMCO Short vs. Leverage Shares 3x | PIMCO Short vs. WisdomTree Natural Gas | PIMCO Short vs. Leverage Shares 3x | PIMCO Short vs. GraniteShares 3x Short |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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