Correlation Between Nasdaq-100(r) and Pimco Total
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Pimco Total 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 Nasdaq-100(r) and Pimco Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Pimco Total Return, you can compare the effects of market volatilities on Nasdaq-100(r) and Pimco Total 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 Nasdaq-100(r) with a short position of Pimco Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Pimco Total.
Diversification Opportunities for Nasdaq-100(r) and Pimco Total
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nasdaq-100(r) and Pimco is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Pimco Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Total Return and Nasdaq-100(r) 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 Nasdaq 100 2x Strategy are associated (or correlated) with Pimco Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Total Return has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Pimco Total go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Pimco Total
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 5.4 times more return on investment than Pimco Total. However, Nasdaq-100(r) is 5.4 times more volatile than Pimco Total Return. It trades about 0.23 of its potential returns per unit of risk. Pimco Total Return is currently generating about 0.13 per unit of risk. If you would invest 37,952 in Nasdaq 100 2x Strategy on September 1, 2024 and sell it today you would earn a total of 3,782 from holding Nasdaq 100 2x Strategy or generate 9.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Pimco Total Return
Performance |
| Timeline |
| Nasdaq 100 2x |
| Pimco Total Return |
Nasdaq-100(r) and Pimco Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Pimco Total
The main advantage of trading using opposite Nasdaq-100(r) and Pimco Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Pimco Total 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 Total will offset losses from the drop in Pimco Total's long position.| Nasdaq-100(r) vs. Bbh Partner Fund | Nasdaq-100(r) vs. Volumetric Fund Volumetric | Nasdaq-100(r) vs. Commonwealth Global Fund | Nasdaq-100(r) vs. Ab Value Fund |
| Pimco Total vs. Pimco Rae Worldwide | Pimco Total vs. Pimco Rae Worldwide | Pimco Total vs. Pimco Rae Worldwide | Pimco Total vs. Pimco Rae Worldwide |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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