Correlation Between Energy Services and Pimco Foreign
Can any of the company-specific risk be diversified away by investing in both Energy Services and Pimco Foreign 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 Energy Services and Pimco Foreign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Services Fund and Pimco Foreign Bond, you can compare the effects of market volatilities on Energy Services and Pimco Foreign 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 Energy Services with a short position of Pimco Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Services and Pimco Foreign.
Diversification Opportunities for Energy Services and Pimco Foreign
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ENERGY and Pimco is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services Fund and Pimco Foreign Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Foreign Bond and Energy Services 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 Energy Services Fund are associated (or correlated) with Pimco Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Foreign Bond has no effect on the direction of Energy Services i.e., Energy Services and Pimco Foreign go up and down completely randomly.
Pair Corralation between Energy Services and Pimco Foreign
Assuming the 90 days horizon Energy Services Fund is expected to generate 17.19 times more return on investment than Pimco Foreign. However, Energy Services is 17.19 times more volatile than Pimco Foreign Bond. It trades about 0.22 of its potential returns per unit of risk. Pimco Foreign Bond is currently generating about 0.31 per unit of risk. If you would invest 22,166 in Energy Services Fund on September 1, 2024 and sell it today you would earn a total of 2,461 from holding Energy Services Fund or generate 11.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Services Fund vs. Pimco Foreign Bond
Performance |
| Timeline |
| Energy Services |
| Pimco Foreign Bond |
Energy Services and Pimco Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Services and Pimco Foreign
The main advantage of trading using opposite Energy Services and Pimco Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Services position performs unexpectedly, Pimco Foreign 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 Foreign will offset losses from the drop in Pimco Foreign's long position.| Energy Services vs. Energy Fund Investor | Energy Services vs. Basic Materials Fund | Energy Services vs. Electronics Fund Investor | Energy Services vs. Health Care Fund |
| Pimco Foreign vs. Energy Services Fund | Pimco Foreign vs. Gmo Resources | Pimco Foreign vs. Icon Natural Resources | Pimco Foreign vs. Short Oil Gas |
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 Stocks Directory module to find actively traded stocks across global markets.
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