Correlation Between Balanced Strategy and Pimco Energy
Can any of the company-specific risk be diversified away by investing in both Balanced Strategy and Pimco Energy 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 Balanced Strategy and Pimco Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Strategy Fund and Pimco Energy Tactical, you can compare the effects of market volatilities on Balanced Strategy and Pimco Energy 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 Balanced Strategy with a short position of Pimco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Strategy and Pimco Energy.
Diversification Opportunities for Balanced Strategy and Pimco Energy
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Balanced and Pimco is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Strategy Fund and Pimco Energy Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Energy Tactical and Balanced Strategy 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 Balanced Strategy Fund are associated (or correlated) with Pimco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Energy Tactical has no effect on the direction of Balanced Strategy i.e., Balanced Strategy and Pimco Energy go up and down completely randomly.
Pair Corralation between Balanced Strategy and Pimco Energy
Assuming the 90 days horizon Balanced Strategy is expected to generate 4.31 times less return on investment than Pimco Energy. But when comparing it to its historical volatility, Balanced Strategy Fund is 10.08 times less risky than Pimco Energy. It trades about 0.13 of its potential returns per unit of risk. Pimco Energy Tactical is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,634 in Pimco Energy Tactical on October 27, 2024 and sell it today you would earn a total of 85.00 from holding Pimco Energy Tactical or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Strategy Fund vs. Pimco Energy Tactical
Performance |
| Timeline |
| Balanced Strategy |
| Pimco Energy Tactical |
Balanced Strategy and Pimco Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Strategy and Pimco Energy
The main advantage of trading using opposite Balanced Strategy and Pimco Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Strategy position performs unexpectedly, Pimco Energy 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 Energy will offset losses from the drop in Pimco Energy's long position.The idea behind Balanced Strategy Fund and Pimco Energy Tactical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Pimco Energy vs. Vanguard Total Stock | Pimco Energy vs. Vanguard 500 Index | Pimco Energy vs. Vanguard Total Stock | Pimco Energy vs. Vanguard Total Stock |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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